Trade Recommendation: Cosmos (ATOM)

Cosmos

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

Cosmos Crypto chart
As of this writing, the Cosmos/US Dollar pair is trading at $6.7372 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.
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.