Compound offers a buying opportunity at this price
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The price action of Compound showed a good risk-to-reward buying opportunity could present itself.
- The bullish conviction was rising in the lower timeframes and a move above $73 could be something to watch out for.
Compound [COMP] has had a bullish outlook on the higher timeframe since early June. The price broke the previously bearish market structure on 24 June with a massive surge past the resistance at $37, and the bulls haven’t halted since.
Read Compound’s [COMP] Price Prediction 2023-24
The recent price action did give buyers pause, but there was some encouraging news. The strong reaction from the support level showed that bulls could drive another rally, especially if the market-wide sentiment shifted bullishly.
A bullish break could give COMP bulls the green signalOn the 1-day chart, we can see a strong rally from $51.8 to $85.9 that occurred earlier in July. The Fibonacci retracement levels (yellow) showed that Compound tested the $59.1 support level, which was the 78.6% retracement level.
The support zone at $64.8 was breached during the recent drop, but what followed was a strong bullish sign. After the drop below $64, the price spent a few hours near the $60 mark before surging higher once more. This bounce saw COMP leave a fair value gap in the $65 region.
A move above the $72.95 mark will flip the market structure bullishly on the daily chart. This has not yet materialized but could do so in the the next 24-48 hours with a daily session close above $72. The RSI climbed above neutral 50 to show bullish momentum while the OBV saw a bounce.
Traders can look to enter in the $68-$70 area, with invalidation below the 78.6% retracement level. The 23.6% and 61.8% extension levels at $93.95 and $106 can be used to take profits. A move higher was the more likely outcome for Compound.
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The Open Interest climbed higher, encouraging bullish tradersIn the short-term, the bounce from $60 over the past two days saw the Open Interest gain almost $70 million, highlighting strong bullish conviction. The spot CVD has also climbed higher to show buying pressure behind the rally.
If COMP can breach the structure and flip it bullishly with a move above $72.5-$73, then it would show a strong likelihood of rising toward the $93-$100 levels.