Fantom (FTM) seems poised to hit a brand new report excessive within the coming periods after its 125% worth rebound from $1.23 on Dec. 14, 2021, to $2.84 on Jan. 3, 2022 triggered a traditional bullish reversal setup.
Dubbed inverse head and shoulders (IH&S), the setup seems when an asset varieties three troughs under a so-called neckline resistance, with the center trough (the pinnacle) deeper than the left and proper shoulder.
The worth of FTM has not too long ago undergone an identical worth trajectory, as proven within the chart under. In consequence, FTM has a typical resistance within the vary outlined by $2.55 to $2.74, which encompasses the size of the inverse head and shoulders sample.
May Fantom rally by one other 50%?
In a perfect world, an IH&S sample would usually lead to a bullish breakout as soon as the value closes decisively above the neckline stage. Ideally, the upside goal be equal to the utmost distance between the pinnacle and the neckline, when measured from the breakout level.
On Monday, FTM nearly accomplished its IH&S formation by reaching its neckline. In consequence, the Fantom token’s next move may very well be a bullish breakout above the $2.55 to $2.74 resistance vary. In doing so, it will pursue a run-up towards $4.33, primarily based on the setup introduced within the chart under.
A pointy worth pullback from the neckline vary, accompanied by a spike in quantity, would threat invalidating the IH&S setup. In that case, the following perfect help line might come close to $2.08. This might be primarily based on FTM’s volume profile visible range (VPVR), a metric that shows buying and selling exercise over a specified interval at specified worth ranges.
Are there dangers of overvaluation?
Draw back dangers within the Fantom market additionally appeared within the type of its relative energy index (RSI), a metric that measures the magnitude of the asset’s current worth adjustments to judge its overbought or oversold circumstances.
Intimately, FTM’s each day RSI entered an overbought territory on Jan. 3 as its studying marginally jumped above 70. The technical indicator suggests FTM is overbought and that it ought to endure a sure diploma of correction to neutralize its market sentiment.
In layman’s phrases, an RSI studying above 70 is normally seen as a signal to sell. Nevertheless, the sell-offs usually don’t essentially come proper after RSI jumps into the overbought zone.
Primarily based on a number of RSI corrections noticed between August and September 2021, the FTM worth seems to increase its upside momentum even after the indicator crosses above 70. At its greatest, the each day RSI had reached nearly 89 on Sep. 9, coinciding with the FTM price hitting the then-record excessive of $1.99.
That considerably leaves FTM with the opportunity of pursuing its IH&S revenue goal of $4.33 regardless of its overvaluation dangers. What might observe is a correction in direction of its 20-day exponential shifting common (20-day EMA; the inexperienced wave within the chart above) round $2.09.
This might carry the value close to to the VPVR help at $2.08, as mentioned above.
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