Cosmos Price Forecast: ATOM's 60% 5-day rally on the verge of correction
|- Cosmos breaks out in successive bullish candlesticks after bouncing off support at the 200-day SMA.
- Increased social media related mentions suggest that a reversal is imminent in the short term.
Cosmos is flying the bullish flag exceptionally high as the week’s trading comes to a halt. The token is up 18% in the last 24 hours but has recovered a whopping 60% in just five days. Earlier this week, ATOM tumbled alongside other cryptoassets and embraced support at $5. Meanwhile, the uptrend appears to be losing steam on touching $8.
Cosmos encounters a foreseen barrier as correction impends
Cosmos price has generally been moving higher within an ascending parallel channel since the breakdown in September 2020. Support at $3.8 functioned as the local bottom that has given way to the massive strides made over the last four months.
The breakdown at the beginning of the week was accentuated by the price sliding below the channel’s middle boundary. Several tentative support levels were bypassed, including the 50 Simple Moving Average and the 100 SMA on the daily chart. However, the 200-day SMA stayed put, allowing bulls to compose themselves and regain control.
A reversal from the dip has seen Cosmos rally more than 60% in five days, brushing shoulders with levels above $8. Meanwhile, ATOM/USD is trading at $7.5 after running into the upper boundary barrier.
A daily close above the channel’s upper limit could see ATOM make way for gains heading to $10. However, if the seller congestion at this level, coupled with those at $8, might continue to limit movement, it will call for correction.
ATOM/USD daily chart
Data shows that the number of Cosmos-related mentions on different social media platforms surged by 89% in just 24 hours. The rising chatter around shows that investor interest and sentiment are growing for this token.
However, increased attention is not necessarily a good sign for the continuation of the uptrend. When prices pump, and the crowd starts paying attention, a dump tends to follow shortly after. Therefore, increased crowd attention can be considered a leading indicator of a short-term price correction.
Cosmos social media mentions
It is worth keeping in mind that the Relative Strength Index is not overbought yet. In other words, ATOM still has some room for growth. Bulls must break the two crucial levels, $8 and the ascending parallel channel’s upper boundary, to sustain the uptrend.
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