Cosmos (ATOM) Shows Promising 15% Recovery, Faces Key Resistance Levels

Cosmos (ATOM) has shown a promising 15% recovery in the last two days, but it now faces key resistance levels that could determine the future of its price action.

Cosmos (ATOM) has shown a promising 15% recovery in the last two days, but it now faces key resistance levels that could determine the future of its price action. Traders eyeing a potential long position should monitor critical technical indicators before making any moves.

After experiencing a prolonged downtrend with lower highs and lows, ATOM recently encountered a long-term trendline support, which coincided with a zone of buying interest. This confluence of technical factors led to a sharp rebound, forming a symmetrical triangle-like pattern on the daily chart.

The recovery came as Bitcoin rallied to new all-time highs, which had a rippling effect on altcoins like ATOM. At press time, the altcoin trades just above the 20-day EMA ($4.35) and the 50-day EMA ($4.47) — two critical resistance levels.

The next immediate focus for traders is whether ATOM can break through the 50-day EMA, which has been a formidable resistance point. If the bulls manage to push ATOM above this level, it could pave the way for the altcoin to target the next resistance level at $5.66.

However, failure to break above these EMAs could result in a pullback, with the potential to test the $3.65 trendline support again, a level that has held firm for several months. As reported earlier by CryptoPotato, this support goes back as far as May 2021.

Key Levels to Watch

Support Levels: $3.65, $2.90

Resistance Levels: $4.47, $5.66

RSI and Market Sentiment

At the time of writing, the Relative Strength Index (RSI) for ATOM stood at 53, reflecting neutral market momentum. A sustained move above the 60-mark could indicate a shift to a more bullish trend, suggesting that buying pressure is gaining strength.

Conversely, a dip below the 40-mark could point to a weakening trend, signaling caution for those looking to enter.

Derivative Data: What Does It Say?

The latest derivative data reveals an interesting picture:

The Impact of Bitcoin

Given the correlation between Bitcoin and altcoins, Bitcoin’s price action will likely play a crucial role in determining the broader market direction.

If Bitcoin continues its upward trajectory, altcoins like ATOM are likely to benefit, especially if ATOM breaks through its key resistance levels.