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.

ATOM’s Recent Price Action

Recently, Cosmos (ATOM) experienced a sharp rebound from its long-term trendline support, forming a symmetrical triangle-like pattern on the daily chart. This recovery occurred during Bitcoin’s rally to new all-time highs, which has had a ripple effect on altcoins like ATOM. As of press time, ATOM is trading around $4.50, just above the 20-day EMA ($4.35) and the 50-day EMA ($4.47) — two key resistance levels.

What Happens Next for ATOM?

The 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.

Key Levels to Watch

Support Levels:

• $3.65: The primary support level aligned with the long-term trendline. A break below this could trigger a deeper pullback to $3.11 — another crucial support zone.

Resistance Levels:

• 50-day EMA ($4.47): The immediate resistance level. A decisive break above this could see ATOM pushing toward the $5.66 resistance, contingent on the broader market’s sentiment.

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:

• Trading Volume: ATOM’s trading volume dropped by 27.67% over the last 24 hours, indicating a slight reduction in market participation amid recent volatility. Lower volume suggests that traders are adopting a more cautious stance, possibly waiting for a clearer breakout signal.
• Open Interest: Despite the volume drop, Open Interest increased by 1.39%, suggesting that more market participants are holding their positions. This could signal that traders are expecting a breakout or trend reversal, potentially leading to more significant moves in the near future.
• Long/Short Ratio: ATOM’s long/short ratio stood at 0.9736, reflecting a relatively balanced sentiment in the market. However, on major exchanges like Binance and OKX, the ratio leaned more bullish, with 2.864 and 2.68, respectively. This suggests optimism among traders, who expect price action to move upward in the short term.
• Liquidation Data: Data from Binance also shows more short liquidations than long liquidations, indicating that the recent price movements may have caught bearish traders off guard. This could add further momentum to ATOM’s potential price rally if the bulls manage to sustain their position.

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.

Conclusion

For Cosmos (ATOM) traders looking to go long, the key is to wait for confirmation above the 50-day EMA ($4.47), which would indicate further upside potential towards the $5.66 level. However, if ATOM fails to hold above this resistance, there may be a pullback to $3.65, and a deeper decline could be in the cards if this level breaks. As always, traders should remain cautious and keep an eye on Bitcoin’s price action, as it will likely influence ATOM’s future movements.