- ATOM price has signaled the start of a potential uptrend by producing a higher high above $9.89.
- A pullback into the FVG range, extending from $9.78 to $9.83 will be a buy sign, before a quick run-up to $10.56.
- A four-hour candlestick close below $9.56 will invalidate the bullish thesis for Cosmos.
ATOM price has shown resilience against bears as it bounced off a crucial support level. This development has pushed ATOM bulls to show their hand, which hints at an incoming rally. Therefore, investors need to position themselves for the next leg.
ATOM price gets ready for its next move
ATOM price bounced off the $9.56 support level on December 7, triggering 4% move to the upside. This move has currently set up a higher high and created an imbalance called Fair Value Gap (FVG) in the process, extending from $9.78 to $9.83.
As ATOM price pulls back to rebalance this FVG, investors can start building long positions. A resurgence of buying pressure in this area is likely to push Cosmos’ market value higher. The ideal place to book profits is $10.56, since the swing highs formed here have buy-stop liquidity resting above them.
This minor run-up for ATOM price provides a 7.40% upside with a 2.8% downside, indicating limited risk for relatively larger gains.
ATOM/USDT 4-hour chart
While things are looking up for ATOM price, a failure to hold above the previous swing low at $9.68 will be the first sign of trouble. However, a four-hour candlestick close below $9.56 will create a lower low and invalidate the bullish thesis for Cosmos.
Such a development could see ATOM price revisit the $9.21 support level.