ATOM witnesses short-term bearish bias, can the buyers reverse the downtrend

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.

• Short-term range lows at $12.4 failed to hold
• Could a retest of the same fuel another leg downward for ATOM? 

Cosmos [ATOM] was in the grip of a strong downtrend on the price charts. A look at the futures market also showed that the selling pressure had not yet abated. Being a weekly open, the 3 October high and low could be important levels for traders over the next week

. Hence, even bearishly biased market participants might want to wait for the 3 October levels to be established.

ATOM set to slide southward once again?

A lower timeframe chart showed a bearish market structure for ATOM. On higher timeframes such as four-hour and daily, the downtrend was visible as well. This meant traders can look for shorting opportunities to trade with the trend. The Relative Strength Index (RSI) has been below the neutral 50 mark for most of the past week. This highlighted steady downward momentum behind the price.

The Accumulation/Distribution (A/D) line had also been on a strong downtrend over the past ten days, to highlight heavy selling pressure. Sellers were in the driving seat, and they were unlikely to vacate in a hurry.

The price action showed the $12.4 region act as a short-term support over the past few days. Once this zone gave way, ATOM was quick to push as far south as $11.97. Hence, a retest of this zone would likely offer a selling opportunity. Invalidation of this bearish notion would be an hourly session close above $12.6. Bearish targets include $11.7 and $11.15.

Prices and OI both depress- is the bottom not in yet?

Toward the final week of September, Open Interest began to rise as the price ranged between the $14.7 and $13.7 levels. However, once the $13.7 level failed to hold as support, the OI shot upward. In the past few days, the OI has slowly begun to fall alongside the price. This downward trend in the futures market was a bearish signal and suggested that the downtrend might not have found a local bottom.

Cosmos was in the process of a bounce from $12 to retest the $12.4 resistance zone. The $12.4-$12.5 would offer sellers a good risk-to-reward shorting opportunity with a clear invalidation scenario. Bitcoin [BTC] also had a bearish outlook as it sat above the $19k mark, and has faced rejection twice near the $20.2k level in the past week.