Trade Recommendation: Cosmos (ATOM)
Cosmos (ATOM/USD) is in the early stages of its bull run. It all started on May 30, 2019, when the cryptocurrency breached resistance of $5.00 and broke out of an ascending triangle pattern on the daily chart. The breakout triggered a rally that sent Cosmos to as high as $7.2362 on June 3rd.
At that point, the market respected resistance of $7.00, and it began to correct. However, it consolidated below the resistance rather than retesting $5.00 as support.
This is a bullish move suggesting that buyers are eager to buy the dip. They are frontrunning each other and this is forcing Cosmos to tap the $7.00 resistance. Bulls have touched $7.00 three times since early this month. We doubt that bears will survive the next onslaught.
Technical analysis shows that ATOM/USD is positioning to take out resistance of $7.00. A move above this price will trigger the breakout from a smaller ascending triangle on the daily chart. This is a continuation pattern indicating that the market will resume its uptrend once consolidation is over.
So far, Cosmos appears to be following the script. Recently, it has created a bullish higher low setup of $6.48 on June 25th. If bulls continue to hold the diagonal support, we can expect Cosmos to break out soon.
The strategy is to buy the breakout and retest of $7.00 as support. If bulls successfully convert $7.00 into support, our initial target is $9.00. Take that out and $11.00 is next.
The process may take a month.
Daily Chart of Cosmos/US Dollar on Kraken
Summary of Strategy
Buy: Breakout and retest of $7 as support.
Targets: $9 and $11
Stop: $6.70 after the breakout.
Disclaimer: The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
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