ATOM can’t recover after a sharp drop

Cosmos (ATOM) has been falling since August 25, and if the long-term picture remains bullish, another wave of decline is expected in the near term, followed by a resumption of the bullish course.

Rollback to support

ATOM is down from a high of $8.84 reached on August 25. The price rebounded sharply from this level, accelerating the fall in early September.

Despite the sharp drawdown, the integrity of the overall bullish structure was not broken. ATOM is continues to trade above the $5 support and the upward support line from the June lows.

ATOM chart from TradingView

Technical indicators signal bearish risks

Technical indicators on the daily chart indicate oversold and at the same time neutral prospects for the coin. The MACD has started to rise, and the stochastic RSI and the RSI itself are falling, with the former looking oversold.

In addition, the price has yet to break through the resistance from the bearish absorption candle formed on September 5.

However, short-term indicators paint a bearish picture. The MACD is declining, the stochastic RSI has almost formed a bearish intersection, and the RSI has met resistance in the form of the 50 mark.

Moreover, the price has not yet reached the level of 0.382% of the Fibonacci correction relative to the previous fall, which means that the current dynamics is more of a correction than the beginning of a new uptrend.

Wave analysis

Cryptocurrency Trader @crypto618 recommends selling ATOM, which is currently in the fourth wave stage, followed by a drop.

On March 13, the altcoin began forming a bullish impulsive wave structure (highlighted in black on the chart) with a stretched third wave. At the moment, the price is in the fourth wave.

This analysis will lose its relevance if the price falls below the April 30 high of $3.077. In this scenario, the coin will also fall under the ascending support line connecting the bases of the first two waves.

The decline from the highs of August 25 was realized in five waves instead of three (blue color on the chart).

This means that the ATOM has either completed a bullish structure and started a bearish one, or is at the stage of wave A of a full-fledged correction. The second option looks more likely.

In any case, the altcoin is likely to fall before resuming growth.

Perhaps the top of wave 4 has already been formed in the area of $5.70, and now the quotes can go to the $3.60 mark.

So, the altcoin is likely to fall to the $3.50 mark before resuming its rise.

Disclaimer


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