Cosmos (ATOM) has experienced a strong 6% increase in its price in just one day, breaking through a key descending trendline.
This surge has fueled optimism, but there’s a critical price level that ATOM must hold in order to sustain this momentum and continue trending higher.
Why the $5 Level is Key for ATOM’s Bullish Continuation
For ATOM to maintain its uptrend, it must break through and stay above the $5 level. This price point has been a significant resistance, and surpassing it would offer a confirmation of the bullish trend that started in the past couple of days.
If ATOM can establish a long-term position above $5, it could potentially trigger a rally, pushing the price to new resistance levels. However, if it fails to hold above this mark, the bullish setup could be invalidated, leading to a price rejection and possibly triggering a market decline.
What Could Happen If ATOM Fails to Hold Above $5?
A failure to break and hold above the $5 resistance could result in a downward correction. A dip to around the $4.30 level could signal weakness, potentially opening the door for further declines toward lower support levels near $4.
Moreover, if ATOM experiences rejection near the $5 level, it may lead to a price correction, with the potential for further testing of support zones like $4.57 and $4.68.
Technical Indicators Show Mixed Signals
The MACD indicator is showing a weak bullish orientation, with its histogram transitioning from bearish to bullish. However, the proximity of the MACD to its signal lines suggests the market may stabilize before establishing a clear trend.
The movement of ATOM’s price after this critical point will depend largely on its ability to maintain positions above the $4.87–$5 range. If the token can stay above these levels, it might continue its upward trajectory.
Liquidation Zones and Market Behavior
Binance’s heatmap revealed that the $4.87 level has a high concentration of liquidation activity, with $233.23K worth of leverage involved. This level, along with the $5 resistance, represents a critical area to watch for potential price fluctuations. Should ATOM fail to hold above these points, long liquidations could occur, adding to market volatility.
On the other hand, higher prices could force short positions to close, potentially pushing the price even higher.
Exchange Activity: Signs of Further Gains?
ATOM’s spot volume is strongest on Binance, followed by Bybit and Coinbase. Significant withdrawals on platforms like Binance and Bybit could suggest that investors are taking profits or reallocating funds, while inflows to exchanges such as Coinbase and Kraken show continued interest in the token.
These mixed signals indicate that, while there may be some momentary downward pressure due to withdrawals, the general sentiment remains positive. If inflows continue, ATOM’s value could maintain its upward trend, barring any significant price rejections.
Conclusion
In conclusion, ATOM’s price action hinges on its ability to stay above the critical $5 resistance. If the price can break through and hold above this level, a bullish continuation may be in store. However, failure to do so could lead to a correction and potential further downside. Investors will need to watch these levels closely to gauge the token’s next move.
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