Cosmos primed for more downside on the price chart- here’s why
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- ATOM was in a firm higher timeframe downtrend.
- A bounce toward $7-$7.2, while less likely at press time, could present trading opportunities.
Cosmos [ATOM] has been in a downtrend since March on the daily chart. ATOM has formed a series of lower highs since then, and that trend did not appear likely to be broken soon. The bounce from the $6.62 level reached $6.92 but couldn’t climb any higher.
Realistic or not, here’s ATOM’s market cap in BTC’s terms
The order books showed some support was present below $6.8, but it was unclear if ATOM can push higher from here. The short-term sentiment was bearish as well. Here are the levels that are of interest to ATOM traders
ATOM was not at an ideal territory for either longs or shortsWhile ATOM bulls managed to force a small bounce from the $6.62 level, there was no evidence to suggest that the bounce could reverse the downtrend. The OBV remained resolutely pointed southward on the daily chart. The RSI in the same timeframe showed significant downward momentum.
It has remained below neutral 50 since mid-April, with an occasional failed foray above such as the ones in July. This was also a sign that the asset was in a long-term downtrend. Hence, swing traders are justified in being bearishly biased.
The Fibonacci retracement levels plotted based on the drop from $7.519 showed that the 61.8% and 78.6% retracement levels are likely to be important. They lie at $7.07 and $7.18 and are ideal entries for short traders. It was unclear if such a bounce could materialize, as the lower timeframe market structure such as 4-hour was also bearish.
There were some buyers above the $6.7 level but can they withstand another wave of selling?Bitcoin was at a long-term support zone and is expected to bounce, but in the event it does not, altcoins could face a bloodbath. The data above showed limit buy orders amounting to a little more than $200k above $6.7 for ATOM.
To the north, the sellers were thinly stretched but there was some liquidity at $7 that the price could be attracted to.Open Interest saw a bounce over the past 24 hours as the prices continued to dip. This signaled strong bearish conviction from speculators.
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A move below $6.65 would likely reach toward the Fibonacci extension levels at $6.419 and $6.18.
The evidence from the price indicators highlighted bearishness and the OI chart also showed short-term seller conviction. Given the higher timeframe downtrend, further downside appeared likely for ATOM.