Cryptocurrencies climbed higher on Sunday from discounted price levels after a desecrating sell-off dragged most alts to monthly lows. However, gains seen in ATOM far eclipsed those of its rivals, extending to 16% over the last 24 hours. The short-term burst was closing in on an important resistance level, following which sellers could be expected to take over once again.
ATOM 4-hour Time Frame
ATOM lined up three consecutive green candles on the lower time frame as bulls hit back around the $27-mark. The formation can easily be mistaken for ‘three white soldiers’ – a powerful bullish reversal pattern that occurs after a downtrend. Now, some alts, including ATOM, can sometimes record a sharp rally right after a large correction as investors buy back at cheap price zones. However, the move is usually short-lived as the broader trend remains bearish.
A quick look at the chart showed that ATOM was zeroing in on a host of price barriers after its pickup. The 4-hour 200-SMA (green), 50-SMA (yellow), and 38.2% Fibonacci Retracement level formed a resistance trifecta and would likely halt any more upside. If a large chunk of investors locks in their profits within this region, the market would be vulnerable to another sharp decline in price. If no pushbacks are seen at $27 or the 78.6% Fibonacci Retracement level, ATOM would look to cut losses at its 15 December low of $20.5.
On the other hand, if a 4-hour candle closes above $35.4, ATOM would look good for another 10% hike to its 23.6% Fibonacci level.
Indicators
The 4-hour RSI faced an important test around 50. Should the momentum oscillator advance beyond 55, buyers would be enticed to take more long positions and extend ATOM’s rally above $35. Rejection at 55-50 would be considered a bearish sign.
Meanwhile, the MACD was close to a bullish crossover and it would be interesting to see if the buy signal offsets a wider downtrend.
Conclusion
There was no doubt that bulls had an advantage with respect to ATOM’s short-term movement. However, any more bullish speculation would be dangerous until ATOM closes above $35.4.