ATOM’s bullish rally stalls: Are sellers back?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Despite posting strong gains in September, ATOM failed to cross a key price hurdle.
- Wavering funding rates hinted at speculators adopting a cautious approach.
ATOM’s strong recovery from the $6.2 price zone in September stalled at the $7.5 price level. Earlier, bulls had rallied firmly with 18% gains between 12 September and 19 September.
Read Cosmos’ [ATOM] Price Prediction 2023-24
However, the inability of buyers to push past the $7.5 price level along with ATOM’s bearish structure on the higher timeframes reintroduced sellers back into the market.
This resulted in a 7% dip with buyers finding some respite at the nearby support of $7.
Bearish structure limits bullish recovery
The 12H timeframe showed the brief bullish run that ATOM buyers enjoyed. This was reflected in the Relative Strength Index (RSI) surging from the lower to the upper range.
Despite the bullish run, the On Balance Volume (OBV) continued to trend lower which was a negative sign for bulls. As volume declined, bears took advantage to halt the bullish rally.
With the RSI back in the lower range and the OBV dipping by over 3 million, the continuation of the bullish rally would be dependent on buyers defending the $7 support level.
A successful defense would see bulls push for the $7.5 price level again. Otherwise, a break below the $7 support could see an extended drop to $6.5.
Funding rates wavered along with declining Open Interest
Market speculators adopted a watchful approach after ATOM’s price drop. The Open Interest (OI) was on an uptrend between 11 September and 20 September, but it dipped sharply on 21 September.
How much are 1,10,100 ATOMs worth today?
This hinted at a reduction in positions by speculators in anticipation of further drops. The cautious approach extended to the funding rates, as it wavered between positive and negative on the 12H timeframe.
Overall, traders should closely track Bitcoin’s [BTC] price action in the short term, as a bullish or bearish swing by the king coin would impact ATOM’s price in the interim.