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Cosmos' (ATOM) steady price dip from the $12 price zone finally found some stability at the $8.8 support level. Earlier, ATOM’s huge retracement had seen its price drop by 28% over a month-long period.
However, its recent price action along with signals from on-chart indicators suggest a reversal might be imminent.
A look at the broader crypto market showed that Bitcoin (BTC) continued to trade between $42k to $43k, as its price action squeezed into a compact range in anticipation of a strong upward move.
ATOM Bulls Can Take Advantage of Support Level to Rebound
The price action on the daily timeframe showed a slowing down of the bearish momentum. This was evidenced by two bullish candles at the $8.8 support level.
A look at the chart indicators provided more insight into the buy setup. The Chaikin Money Flow (CMF) crawled to the zero mark, despite the price dip. This showed that investors remained optimistic about a price rebound with capital still present for ATOM.
On the other hand, the Relative Strength Index (RSI) which tracks the buying/selling momentum showed that sellers still had some skin in the game with the reading staying under the neutral 50. However, an uptick toward the neutral 50 mark was observed, as of the time of writing.
The bullish expectation is based on the positive signals from the four-hour timeframe. The RSI rose above the neutral 50 and the CMF hit +0.17. This signalled that short term traders were actively bidding for ATOM.
As such, intraday traders can enter at the current market price of $9.1. This will serve as a good position to register gains of up to 15% in the short term.
Alternatively, if price closes below the support zone, it could signal an end of the bullish defense at the support level with sellers able to extend the bearish momentum.
Disclaimer: This article does not constitute trading, investment, financial, or other types of advice. It is solely the writer’s opinion. Please conduct your due diligence before making any trading or investment decisions.
