Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Of late, ATOM has reaped the benefits of a risk-on broader market. The altcoin registered a 30% jump over the last three days and finally broke north of its down-channel – A setup that lasted for a few weeks. Since hitting a 1-month high of $44, ATOM’s bullish momentum has cooled off as the RSI flashed overbought readings.
Its trajectory now depends on near-term support levels which are aimed at thinning losses and triggering a rebound. At the time of writing, ATOM was trading at $39.1, up by 10% over the last 24 hours.
ATOM 4-hour Chart
ATOM’s down-channel appeared after a massive rally took place at the end of September. Unable to sustain good buy volumes, ATOM’s value eroded steadily – Setting up a near 33% decline from the highest to the lowest point within the pattern. However, the narrative quickly changed post 12 October. Support levels of $31.5 and $33.5 helped bulls gather numbers for a move above the upper trendline.
Now, according to the 4-hour Bollinger Bands, ATOM was overbought and needs to stabilize before the next swing. This was also backed by similar readings on the RSI. Going forward, the region between $38.6 and $36.6 can enable a bullish rebound and keep ATOM within a bullish bias. The zone also bolstered the 20-SMA’s (red) presence.
However, expect additional drawdown should ATOM weaken below this defensive resource.
Meanwhile, the ongoing retracement was supported by a declining RSI and MACD. Ideally, the RSI should find support at 50-45 considering ATOM was within an uptrend. On the flip side, expect some deeper losses in case the RSI and MACD continue their decline over the coming sessions.
Strong 24-hour trading volumes will likely see ATOM resume its uptrend at the end of its correctional phase. Those wishing to take part in the next upcycle can long ATOM between $38.6 and $36.6. Stop-losses can be set right below the 20-SMA (red) at $36.