Is the ATOM price rebound a bull trap?
From a technical perspective, ATOM remains at the risk of continuing its decline in Q2/2022.
First, the Cosmos token's 45% rebound accompanies a drop in its trading volumes, suggesting a low trader turnout behind the rally that, in turn, could lead to a price reversal. Second, the price appears to have formed anATOM/USD four-hour price chart featuring ascending triangle setup. Source: TradingView
As a rule of technical analysis, ascending triangles formed during a downtrend resolve after the price breaks below their lower trendline and continue falling until it reaches the level at length equal to the triangle's maximum height. Applying the same theory on Cosmos shifts ATOM's downside target to $7.50 with the breakdown point around $10.35.In some cases, however, ascending triangles in a downtrend could lead to a trend reversal instead of continuation. Therefore, the bulls could attempt a breakout with a run-up to the triangle's upper trendline near $12.50.ATOM's likelihood of continuing its recovery is high if this occurs particularly with increasing trading volume.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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