Cosmos: Risk-Averse Traders Have Reason to Ignore Bullish ATOM Crossover

Disclaimer: The information presented does not constitute financial, investment, trading or other advice and represents the opinion of the author only.

  • Cosmos [ATOM] witnessed a bullish MACD crossover – a buy signal
  • ATOM has seen improvement in development activity and funding rates, but sentiment is still negative

Cosmos [ATOM] rebounded after bitcoin [BTC] reached $16.19,000 on November 22. Notably, BTC’s drop of $16.60K between November 27 and 28 led to ATOM’s price correction.

At the time of writing, ATOM was trading at $10.155, up 4% in the last 24 hours. Following a confirmed bullish moving average convergence divergence (MACD) crossover on November 25, ATOM investors saw a buying opportunity ahead of them.

Read Cosmos’ [ATOM] price prediction 2023-2024

However, ATOM’s market structure was still bearish at press time. Therefore, risk averse traders might look for buying opportunities after a breakout and retest this Fib level in a day or two.

A Bullish MACD Crossover: Can the Bulls Maintain the Bullish Momentum?

Source: Trading View

The MACD bullish cross could be seen as the buy signal that coincided with a developing bullish trend. However, plotting the Fibonacci retracement tool between the November high and low ATOM prices led to results that were unconvincing.

ATOM failed to break above the 23.6% Fib ($10.413) level – a significant resistance. If the bulls break the 23.6% Fib level and retest this level or confirm it as support, investors can take positions for a long trade as the support at $9.854 can be considered stable.

In this case, the target for a long position would be the bearish order block at the 50% Fib level ($12.289). Key technical indicators point to this trend.

The Relative Strength Index (RSI) retreated to the lower ranges edging into oversold territory. This showed that the selling pressure was decreasing. It also meant that the bulls were slowly gaining influence.

As a result, On-Balance Volume (OBV) has reached new highs since mid-November. It showed that trading volumes were increasing, which could increase buying pressure and help bulls break through resistance targets.

However, an intraday close below $8.736 would invalidate the tilt above. In this case, another downtrend could find new support at $7.059 or lower.

Improved development activity, but sentiment remains negative

Source: Santiment

According to Santiment Data, ATOM has seen a steady increase in development activity starting in October. However, development activity plummeted in mid-November, only to rebound steadily thereafter.

Interestingly, ATOM’s development activity was positively correlated with its price performance. Therefore, the increase in development activity at the time of the press release could indicate a probable increase in the price of ATOM.

However, ATOM’s weighted sentiment remained negatively worrisome throughout November. As this also has a direct impact on ATOM’s price, it could complicate ATOM’s ongoing price recovery.

Therefore, risk averse traders should not rush to buy the bullish MACD crossover. Waiting for a break of the 23.6% Fib resistance level and a retest would be a sure sign to initiate a move. However, waiting for a retest could lead to a missed opportunity if the uptrend continues without retesting the level.

Thus, cautious traders should wait for a convincing break above the 23.6% Fib level. Additionally, you should monitor the performance and sentiment of BTC on ATOM.

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