ATOM, has had an exceptional week of trade. Data from Messari shows that the alt was trading at a near 40% premium over the last seven days after a strong bull run ignited from $20.2 support.
However, certain signs suggest that its current uptrend was exhausting especially as the price approached an upper sloping trendline. RSI’s bearish divergence and a bearish twin peak along the Awesome Oscillator were ominous of an incoming retracement over the next 48 hours. Meanwhile, bulls would hope to flip an upper sloping resistance line in order to maintain ATOM’s favourable narrative. At the time of writing, ATOM traded at $31, up by 12.4% over the last 24 hours.
ATOM 4-hour time frame
ATOM’s trajectory on the 4-hour chart was drawn between two trendlines- an upper sloping trendline which has been active for the past two months and a bottom trendline which extended from late-June lows. Recently, a bullish pennant breakout helped ATOM extend its value above the 38.2% Fibonacci level but the upper trendline was yet to be overturned.
Hence, the region between $32-$32.6 was critical to ATOM’s success. Should buy volumes remain consistent as ATOM closes above $32.6, expect bulls to close the gap to $40 rather quickly as short-sellers get taken out of the picture. However, ATOM had to negotiate past some red signals first.
Indicators
ATOM’s 4-hour RSI has been forming lower highs over the past three days. Despite this, the index was yet to stabilize from overbought readings. This price action suggested that bulls were gradually losing control of market proceedings. The Awesome Oscillator formed a series of lower peaks as well and gave rise to a bearish twin peak. This pattern, which exclusively develops on the Awesome Oscillator, helps identify an early shift of momentum. It also functions as a potential sell-signal. If these signs influence selling behavior before ATOM closes above $32.6, expect a market drawdown. Support levels at $28.4 and $26.2 would be in action if bulls fail to offer any pushbacks at $30.
Conclusion
ATOM developed some warning signs as its price approached the upper trendline. The 4-hour RSI and Awesome Oscillator invited selling behavior and a 10%-18% retracement was in lieu over the coming days. To negate this prediction, ATOM needed to capture ground above $32.6 on good buy volumes. A retest of $40 can be expected in a bullish scenario.