Rally or not, the “oversold” ATOM rise is likely to play out as follows
If you bought ATOM at or near its bottom in June and you’re still holding the bag, you should be happy with your decision. In fact, the cryptocurrency has maintained an overall bullish trajectory since pivoting after a major crash earlier this year.
ATOM has been trading in an ascending range and its latest price action indicates that its bulls are getting stronger. Moreover, it concluded the week as one of the best performing cryptos in the market.
ATOM is up 48% since Wednesday after bouncing just above its support line and 50-day moving average. Interestingly, the rally was strong enough to break above its resistance line, as well as its 200-day MA.
Now, although ATOM’s strong rally this week is a sign that the bulls have strengthened, there are signs of a potential pullback.
For example, the altcoin briefly became overbought, according to the RSI, with the rise already generating some profit taking.
Assess bullish triggers
The rise was strongly supported by the sustained rise in market sentiment during the second half of the week. ATOM’s rally was particularly buoyed by a surge in social dominance and development activity.
Cosmos development announcements over the week include a new Cosmos SDK upgrade. The latter focuses on groups and governance-related upgrades designed to improve the Cosmos SDK.
The other major development is the addition of a new project called Delphi Digital in the Cosmos ecosystem. The new addition will facilitate the development of interconnected DApps, thus contributing to the growth of Cosmos.
— Cosmos – Internet of Blockchains ⚛️ (@cosmos) September 9, 2022
Is it enough to support a strong breakout?
ATOM’s price action at press time looked set for a strong bullish push, especially after its performance over the past few days. The cryptocurrency could see more upside if backed by a strong bullish market outlook. This way, he can take advantage of the momentum that already exists, as HODL traders anticipate higher prices.
The other side of the altcoin would feature a retracement due to profit taking after its last rally. Traders planning to execute short positions can take advantage of such an opportunity. Shorts traders should keep an eye out for the bearish market outlook. This, because such a result would favor a strong decline.