The Cosmos (ATOM) price has been decreasing since August 25. While the long-term price action still looks bullish, another short-term decline is expected before the price resumes its upward movement.

The ATOM price has been falling since it reached a high of $8.84 on August 25. The price dropped sharply shortly after reaching the high, further accelerating its rate of decline at the beginning of September.

Despite this sharp drop, the price has preserved its bullish structure. ATOM is still trading above the $5 support area and an ascending support line drawn since the June lows.

Technical indicators on the daily time-frame show that the rally is oversold but give a neutral view on future prices. While the MACD has begun to increase, both the Stochastic RSI and the RSI are falling, even if the former is oversold.

In addition, the price has yet to clear the resistance from the bearish engulfing candlestick on September 5.

However, short-term indicators have turned bearish. The MACD is decreasing, the Stochastic RSI has almost made a bearish cross, and the RSI is facing resistance from the 50 line.

Furthermore, the price has yet to even reach the 0.382 Fib level of the entire previous decline, making it more likely that the current move is a correction rather than the beginning of a new upward trend.

Cryptocurrency trader @crypto618 stated that ATOM could be shorted since it’s likely in a wave 4, which will be followed by a decline.

Beginning on March 13, it’s possible that ATOM has begun a bullish impulsive five-wave formation (in black below) with an extended third wave. If the count is correct, the price is currently in wave 4.

The count would be invalidated with a fall below the April 30 wave 1 high at $3.077. A decrease below this level would also invalidate an ascending support line connecting the bottom of waves 1 and 2, confirming the invalidation of the count.

However, when looking at the decline since the August 25 high, the move took place in five waves instead of three (in blue below).

This means either that the entire bullish formation has ended and ATOM has now begun a bearish impulse, or that this is only the A wave of the entire correction. The second option seems more likely.

Whichever the case, the ATOM price seems to have one more waves down before it possibly resumes its upward movement.

While it’s possible that the top of wave 4 is already in, a more likely level for it would be at $5.70, since there is a confluence between the different fib levels. Afterward, the price could fall all the way to $3.60.

To conclude, another price decline towards $3.50 is expected before the price can resume its upward movement.

The post ATOM Struggles to Retrace After Sharp Drop appeared first on BeInCrypto.

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