Cosmos’ ATOM has so far registered a bigger selloff in April than its rally in March. In contrast, most of the other top cryptocurrencies experienced price correction but only by a fraction of their rally towards the end of Q4.
ATOM has been on a bearish trajectory since its most recent local peak at $33.29 on April. It recently bottomed out at $22.44 on 18 April and has since then experienced some upside and traded at $24.71 at the time of writing. However, a look at its price action in the last few days reveals significant consolidation just above an ascending support line that extends to August last year.
Source: TradingView
Zooming out reveals that ATOM’s macro trend has been trading within a support and resistance zone. Its resistance line aligns with its historic high levels and has been retested at least 4 times in the past. The support level has also been retested multiple times in the past and we observed another retest this week.
The support retest underscores reduced selling volume and slight accumulation after interacting with the support level. The MFI experienced an uptick after almost dipping below 20 while the RSI climbed to 41 after bottoming out at 33. However, ATOM’s consolidating price action highlights the lack of enough buying pressure to trigger significant upside.
Can ATOM’s funding rate reveal its next move?
ATOM’s on-chain metrics show an increase in investor sentiment within the consolidation zone. For example, the Binance derivatives funding rate recovered from negative rates from 11 April.
This is the same date that the price entered the consolidation zone just above the support line. The FTX funding rate also recovered from negative rates to positive rates.
Source: Santiment
The funding rate changes reflect changing sentiments and increased interest from investors in the derivatives market. Although the above observations highlight the likelihood of a bullish recovery, there is still a significant risk of more downside especially if another market-wide selloff occurs. Based on this, ATOM can be expected to break out of its current price range over the course of the weekend.
