August 11, 2020
By Benson Toti
ATOM has plunged 8% today as bears violently reject attempts advances near $6.00
ATOM/USD jumped by more than 20% over the weekend to hit a new high of $5.88 to join the likes of Band Protocol and Tezos as one of the standout performers.
The recovery appears to have hit a major hurdle with the price of the token tanking by nearly 8.5% as of writing. The correction has happened even as reports emerge that a feud involving the founding team almost ran the blockchain interoperability project into the ground in February.
However, the feuding did not halt the project and after the crypto price crash of March, Cosmos price started to rise with development on the ecosystem that hosts protocols like Kava and Band picking up momentum.
ATOM/USD in free-fall mode
The weekend saw Cosmos spike by 20% to hit a new high of $5.88, although the cryptocurrency has since retraced to lows of $5.12 at the time of writing. With bulls struggling to hold on to gains, the ATOM/USD pair appears to have peaked and the only route short term could be a correction to prices below $5.00.
After hitting its bottom at $1.50 in March, ATOM/USD rose to a high of $4.40 in June before a pullback saw it establish support at the crucial buy zone of $3.60. In August, as Bitcoin skyrocketed to $12,000, ATOM posted a similar rally to hit $5.00 before blasting through resistance at $5.50 to see bulls attempt a new attack at $6.00.
Bears had other ideas though, so despite reaching its highest price since June 2019, Cosmos appears to be free-falling towards support below $5.00.
Cosmos price has broken below its moving average on the 15-minute timeframe, as seen on the chart.
It is possible traders are selling their Cosmos tokens to rotate the profits in other outperforming assets. For ATOM/USD, the lack of any support above $5.00 means prices could plummet to August 1 levels around $4.00.
The Cosmos price has printed three successive negative candles with lower highs and lower lows. The RSI has formed a bearish divergence and looks set to pierce into negative territory. If the downside persists over the next few sessions, ATOM/USD price is supported at the 50 SMA at $4.41 and 100 SMA at $4.11.