Key Indicators for Cosmos [ATOM] Traders to Consider Before Taking Long Positions

Following a recent bounce from its long-standing trendline support, Cosmos [ATOM] displayed a pattern reminiscent of a symmetrical triangle on its daily chart. This movement led to a robust recovery alongside Bitcoin’s surge towards a record high exceeding $75K.

Will ATOM manage to sustain its upward momentum, or is it likely to experience a correction?

Anticipated Developments

ATOM recently bounced back from a crucial trendline support (marked in white, dashed) after a bullish resurgence in the past few days. Currently priced at $4.50, it is trading slightly above both the 20-day EMA ($4.35) and the 50-day EMA ($4.47) – two significant resistance levels. A definitive close above these EMAs could pave the way for further advances towards the $5.66 resistance threshold.

Should ATOM struggle to maintain its position above these EMAs, a potential decline towards the $3.65 trendline support might ensue. This level has proven to be resilient over the past several months.

At the time of writing, the RSI was hovering around 53, indicating a neutral market momentum with a moderately strong buying pressure. A sustained rise above the 60 level could signal a resurgence of bullish sentiment. Conversely, a drop below the 40 level would suggest a weakening trend.

Critical Levels to Monitor

Support Levels: The immediate support for ATOM is situated around $3.65, aligning with the long-term trendline. A breach below this level could trigger a more substantial descent towards $3.11 – another pivotal support zone.

Resistance Levels: In terms of upside barriers, ATOM appears to encounter initial resistance at the 50-day EMA ($4.47) and $5.66. A successful breakthrough beyond these levels might propel the altcoin towards testing higher thresholds, subject to broader market sentiments.

Data from Derivatives Shows the Following

Over the past 24 hours, ATOM’s trading volume recorded a notable decline of 27.67%, indicating cautious trader participation amidst recent market fluctuations.

Despite the drop in volume, Open Interest saw a 1.39% increase, suggesting traders are maintaining their positions and possibly anticipating a breakout or a change in trend direction.

With an overall long/short ratio of 0.9736, sentiment appears relatively balanced. Notably, on Binance and OKX, the long/short ratios were notably bullish at 2.864 and 2.68, respectively, indicating optimism among traders.

Furthermore, Binance’s liquidation data highlighted a higher number of short liquidations compared to longs, implying that recent price movements caught pessimistic traders off guard. It is also advisable for traders to factor in Bitcoin’s price fluctuations, as they are likely to influence general market trends and the movement of ATOM.