ATOM has recently reaped the benefits of a risk-on broader market. Over the last three days, the altcoin gained 30% and finally broke north of its down-channel – a setup that lasted a few weeks. ATOM’s bullish momentum has slowed since reaching a 1-month high of $44, as the RSI has displayed overbought readings.
Its future path is now determined by near-term support levels, which are aimed at reducing losses and triggering a rebound. ATOM was trading at $39.1 at the time of writing, up 10% in the previous 24 hours.
ATOM’s down-channel appeared following a massive rally at the end of September. ATOM’s value steadily eroded as it was unable to sustain high buy volumes, resulting in a near 33 percent drop from the highest to the lowest point within the pattern. However, the narrative quickly shifted after October 12th. Bulls gathered numbers for a move above the upper trendline at support levels of $31.5 and $33.5.
ATOM was overbought according to the 4-hour Bollinger Bands and needs to stabilize before the next swing. This was supported by similar RSI readings. In the future, the region between $38.6 and $36.6 can support a bullish rebound and keep ATOM in a bullish trend. The zone also increased the visibility of the 20-SMA (red).
Expect additional drawdown if ATOM falls below this defensive resource.
Meanwhile, a declining RSI and MACD aided the ongoing retracement. Given that ATOM was in an uptrend, the RSI should find support between 50 and 45. On the other hand, if the RSI and MACD continue to fall in the coming sessions, expect some deeper losses.
At the end of its correctional phase, ATOM will most likely resume its uptrend due to high 24-hour trading volumes. Those interested in participating in the next upcycle can buy ATOM between $38.6 and $36.6. Stop-loss orders can be placed at $36 just below the 20-SMA (red).