ATOM Price Hits Yearly Low After 50% Slide – Can ATOM Bulls Expect a Reversal?

Key Takeaways

• The ATOM price decreased to a new yearly low of $6.20 on June 18.
• ATOM’s price has decreased over 50% and traded under a resistance trend line.
• Can ATOM recover after its yearly low or will the decline continue further?

The Cosmos price has not performed well in 2024. In fact, it has fallen nearly 35%. The weakness is highlighted when looking at the fact that the price made a new low in July, while most of the crypto market trades above their April lows.

The ATOM price fell to a new yearly low on June 18, and even though it bounced, it still trades below its main resistance area. Can the ATOM price recover from these hardships, or will the bearish trend deepen?

ATOM Bounces After Yearly Low

The ATOM price has fallen under a descending resistance trend line since March, when it had just reached a new yearly high of $14.58. The decline initially led to a low of $7.24 on April 13. After a weak bounce, the price was rejected by the resistance trend line again and fell to a new yearly low of $6.20 on June 28.

The price bounced afterward and created a higher low. Before the bounce, both the daily RSI and MACD generated notable bullish divergences (green). Such divergences often lead to pronounced upward movements.

Additionally, the wave count shows a completed five-wave decline since the yearly high. So, it is possible that ATOM will increase toward the 0.382 Fibonacci retracement resistance at $9.45. This is also a horizontal resistance area. A breakout from the resistance trend line at $7.60 will confirm this possibility.

Despite this bullish short-term ATOM price prediction, failure to break out from the trend line can trigger a decline to the 2022 low of $5.60.

Cosmos Suffers Outage After Network Upgrade

In May, Cosmos announced the Gaia v17 upgrade, which, among other things, lets new chains customize which validators participate and how much voting power they need. The Cosmos upgrade went live on June 5, at block height 20,739,800. 

However, the process of the release was not smooth. Rather, the Cosmos team announced that the network suffered a temporary outage. Nevertheless, the problem was resolved after roughly four hours.

https://twitter.com/cosmoshub/status/17985128438532712234

While blockchain outages are uncommon, they are not unheard off. More famously, Solana experienced its 11th outage in February, and has been having outages every two months on average. Additionally, DYDX experienced a 9-hour outage in April  after a network upgrade.

The ATOM price did not react to the outage. Rather, it is trading inside the $8.60 horizontal area, where it has been since the start of April.

What to Make of ATOM’s Trend?

The weekly time frame chart shows the ATOM price has fallen under a descending resistance trend line since September 2022. During this period, it briefly broke out from the trend line in March (red circle) before falling below it again. Because of this, the breakout is considered just a deviation.

After the deviation, ATOM returned and bounced at the support area (green icon), where it has traded since the beginning of March.

Technical indicators do not help to confirm the future trend’s direction. Rather, they give mixed readings. More specifically, the MACD and RSI are below 0 and 50, respectively. However, they have both started to trend upward.

As a result, looking at a lower time frame can help determine if ATOM will break out from the resistance trend line or fall below the $8.60 support instead.

ATOM Price Shows Weakness After Breakout

The daily time frame chart is leaning bearish. This is because of the weakness shown after ATOM broke out from a descending resistance trendline. Rather than continuing the increase, ATOM fell to its pre-breakout levels and trades in an ascending parallel channel (white).

These channels usually contain corrective movements, meaning that a breakdown is the most likely future outlook. If this happens, it will also cause a breakdown from the $8.60 horizontal support area.

Furthermore, the increase since the April 13 bottom resembles an A-B-C corrective pattern (black). So, it is unlikely that it is the start of a new upward trend.

Similarly to the weekly time frame, technical indicators give mixed readings.

So, the readings from the weekly and daily time frame imply a breakdown from the $8.60 area is more likely than a breakout from the resistance trend line. This prediction will be rendered invalid if ATOM breaks out from the short-term channel.

ATOM Could Bounce Soon

Unlike a large portion of other cryptocurrencies, the ATOM price has not performed well in 2024. While it fell to a new yearly low on June 18, the bullish divergences in the RSI and MACD support the possibility of a bounce. A breakout from the resistance trend line will confirm this outlook.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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