ATOM must hold $18 as support to stop Cosmos from making new 2022 lows
|- ATOM price is resting near its 2022 lows and a major Fibonacci support level.
- Another 30% drop is likely if $18 fails to hold as support.
- In conjunction with time cycles, extreme oversold conditions indicate a bullish reversal may begin.
ATOM price action has faced the same selling pressure seen across all risk-on instruments. Cosmos lost nearly 40% of its value from the beginning of April to the close of April, and that trend may continue. But extremes in the oscillators may hint at some reprieve coming soon.
ATOM price may surprise with a major, albeit temporary rally
ATOM price and the broader cryptocurrency market have experienced some relief from the constant selling pressure. The relief rally before the US Federal Reserves meeting is not a surprise, but neither is the bounce itself.
ATOM/USDT Daily Ichimoku Kinkon Hyo Chart
The oscillators on the daily chart show clear signs that a bottom may be in. For example, the Relative Strength Index hit lows not seen since the Covid Crash in March 2020 - indicating extreme oversold conditions. Likewise, the Composite Index shows even more extreme oversold conditions after hitting new all-time lows.
From a bullish perspective, there is a theoretical long opportunity for ATOM price on the $0.50/3-box Reversal Point and Figure chart. The long idea is a buy stop order at $20, a stop loss at $18, and a profit target at $27.25.
ATOM/USDT $0.50/3-box Reversal Point and Figure Chart
The theoretical buy opportunity is based on a pattern in Point and Figure analysis known as a Spike Pattern. The entry from the Spike Pattern is the 3-box reversal and, as such, has no invalidation point. As ATOM price moves lower, the entry moves lower as well.
However, downside risks remain substantial. There is a significant gap in the 2021 Volume Profile between the high volume nodes at $18 and $13. Any sustained period spent below the $18 value area increases the likelihood of a swift sell-off towards $13.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.