The central theses
- Private investors have become predominantly optimistic about Cosmos after its price development.
- ATOM is up over 50% in the past three days and has hit new all-time highs.
- Despite the recent boom, on-chain and technical metrics point to a retreat.
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The interoperable blockchain network Cosmos has played a role lately as its native token ATOM hit new highs. Regardless, various metrics suggest that this cryptocurrency is about to be retraced before resuming its upward trend.
The ATOM of the cosmos is reaching new all-time highs
Cosmos caught the market’s attention over the weekend after an impressive rally with its token hitting a new all-time high.
ATOM’s price rose over 50% in the past three days, outperforming some of the top cryptocurrencies by market capitalization. It floated from $ 5.60 to $ 8.6 for the first time.
In addition to prices, data shows that the number of ATOM-related mentions on various social networks has also skyrocketed. Since August 21st, the social engagement of this altcoin has increased fivefold. The emerging chatter about Cosmos allowed him to reach # 1 on Santiment’s list of emerging trends.
The high profile that the interoperable blockchain token has generated isn’t necessarily a good sign of its short-term price action. When prices go up and the crowd is paying more attention, a token usually falls shortly afterwards.
New trends from Santiment
Dino Ibisbegovic, Head of Content and SEO at Santiment, claims that prices regularly drop around 8% after a given cryptocurrency claims one of the top three positions on this list.
Therefore, increased awareness of the crowd can be seen as an early indicator of price collapses.
A steep correction before further gains
The TD Sequential Index adds credibility to the bearish outlook. This technical indicator is currently showing a sell-signal in the form of a green nine-candlestick on the Cosmos 12-hour chart.
A surge in sell orders may help confirm the bearish pattern, suggesting a correction of one to four 12-hour candlesticks before resuming the uptrend.
Historical data shows that the TD setup was incredibly accurate to anticipate local peaks in the trend of this altcoin. Looking at the 12-hour chart, around six of the eight sell signals presented since the beginning of the year were validated. Therefore, the current pessimistic view must be taken into account despite the ongoing hype surrounding ATOM.
ATOM / USD on TradingView
A downturn that brings Cosmos below the USD 7.8 support level will confirm the bearish scenario. In such circumstances, ATOM can fall towards the Fibonacci retracement level of 61.8% or 50%.
These critical areas of support are at $ 7.1 and $ 6.6, respectively.
ATOM / USD on TradingView
Given the recent volatility of other cryptocurrencies like OMG Network, the optimistic outlook cannot be out of question. Bullish momentum pushing ATOM above the recent high of $ 8.6 could have the strength to keep prices higher.
When this happens, investors should watch out for an uptrend towards the Fibonacci retracement level of 127.2%, which is at $ 9.7.
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