Cosmos is one of the well-known projects in the crypto space. It provides a product that helps communicate a network of blockchains via Inter Blockchain Communication (IBC) and transfer data through them securely. The Cosmos SDK (Software Development Kit) is very widely used in the crypto space, it has been integrated into multiple projects including the industry leaders like Binance chain, OKChain, Terra chain, and many more. ATOM is the native token of the Cosmos ecosystem and is used for the payments in the network as well as for the governance, the on-chain holder of ATOM can participate in the decision-making system and vote accordingly.
In this article, we will look into the current scenario of ATOM token on the daily timeframe and the emerging price action. But before going forward please read the following warning:
Note: The purpose of this Technical Analysis is to show the use of indicators and understand their meanings. So before making any financial decisions do your own research. Now sit back and enjoy the analysis!!
Support & Resistance Zones
As we have seen the importance of support & resistance zones in the previous analysis of BitcoinCash and Crypto.com, it is almost impossible to complete a technical analysis without these zones. Well, you can set up your own trading chart according to your strategy but having these zones bring some sort of confirmability in forecasts.
Check out the ATOM/USD chart at daily timeframe:
Current Support Zones
Primary Support Zone: $29.5 - $30
Secondary Support Zone: $24.5 - $25.5
As we can see in the chart above the current price is in the primary support zone and it is respecting the zone for now. It is possible that we will see a bounce back from here if not & the price fails to hold above this support zone then the next support zone is around ~$25 which has been tested strongly in the previous weeks.
Current Resistance Zone
Primary Resistance Zone: $34.5 - $36.5
Secondary Resistance Zone: $43.5 - $44.5
As we can see that recently the primary resistance zone has been tested and the price got rejected from there. It has to be broken in order to move to the next resistance zone of ~$35 which has already shown its strength in previous testings. The price has been rejected from the secondary resistance zone four times in almost a half-year.
Trend Reversal
If we draw some trend lines over the daily chart we can see the formation called "Falling Wedge". An important thing to consider here from the chart below is that there was a breakout from the Falling Wedge and a price appreciation has been seen afterward. Although the price got rejected from the primary resistance zone, it made a Higher High (HH). The breakout from Falling Wedge and formation of Higher High indicates the trend reversal.
What Are The Indications From Indicators?
We have seen the support & resistance zones and an indication of a trend reversal from the breakout of Falling Wedge & Higher High formation. Now let's have a look into trading indicators, what they are indicating for more confirmation on trend reversal.
Smooth Moving Average (SMA200)
As of we know now the SMA 200 indicates the long-term trend. And in the chart below we can see that yesterday's daily price bar has been below the SMA 200 line which indicates the price is shifting towards the downtrend on the medium & long-term scale (cannot confirm yet). But as SMA 200 and the primary support both are almost overlapping each other we might see a strong bounce back from this level.
MACD & RSI (Moving Average Convergence Divergence & Relative Strength Index)
In the previous analysis, we considered MACD & RSI individually but here we will look into both of them commonly. Here on the MACD indicator, the MACD line is above the Signal Line which indicates the bullish scenario but the MACD histogram has been fainting out which means it has been topped out.
Whereas the Relative Strength Index (RSI) is at ~49.5 indicating the neutral conditions.
If better image resolution check: https://www.tradingview.com/x/mloJnBqR/
Conclusion
Now the complete picture is in front of us and we have seen what indicators are indicating. From that, we can consider that the price is in an uptrend for the short term after testing the primary supports and an unconfirmed downtrend in the short & long term. Along with the technical analysis, it is important to see the general sentiments which I suppose are extremely uncertain due to the ongoing Russian invasion and the coming sanctions over Russia by international communities.
Hope you found this article informative and learned the use of basic trading indicators as well as a new terminology Falling Wedge. Do share your opinion on this analysis and your overall opinion on Cosmos project.
