The Cosmos price has staged a strong recovery in the last week following its drop to trend line support, proving the ATOM rally is firmly back on track. Cosmos (ATOM/USD) jumped 18% in early trading Tuesday, increasing its five-day winning streak to a 54% gain and bringing the all-time high back into view.
In the last six weeks, ATOM has been one of the better performing cryptocurrencies, surging almost 200% since the middle of July. This helped Cosmos increase its market cap to $5.75 Billion. As a result, it has climbed the rankings to become the 28th largest cryptocurrency.
Cosmos, which focuses on blockchain interoperability, has made several positive advances recently. The release of Decentralized Finance (DeFi) protocols’ was followed by launching a sidechain, allowing asset transfers with Ethereum (ETH/USD). Furthermore, Cosmos is also working towards Bitcoin (BTC/USD) integration.
This is certainly encouraging for the bulls. But even more encouraging is that after returning to trend line support, the Cosmos price surged higher. This validates the uptrend and reinforces the bullish outlook.
The daily chart shows that ATOM dropped 30% last week, tagging the uptrend at $17.20, before reversing. This refuelled the rally, lifting Cosmos to a four-month high of $26.39 this morning. An obvious upside target is May’s $32.74 all-time high, and considering the momentum, this could come under threat shortly.
Rising trading volumes support the move higher and suggest willing buyers. However, the Relative Strength Index (RSI) has ventured into overbought territory, and at 74.71, indicates the rally is stretched. Furthermore, there are signs of speculative froth returning to cryptos. Therefore chasing the price higher does carry risks.
In saying that, the bullish outlook remains in place as long as ATOM stays above trend line support, now seen at $17.95. However, should the Cosmos price slip below this level, it will invalidate both the trend line and the bullish view.
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