This crucial trading pattern mean the extension of Fantom’s (FTM) 125% rebound

Fantom (FTM) looks poised to strike a brand-new record high in the coming sessions after its 125% cost rebound from $1.23 onDec 14, 2021, to $2.84 onJan 3, 2022 set off a traditional bullish turnaround setup.

Dubbed inverted head and shoulders (IH&S), the setup appears when a possession forms 3 troughs listed below a so-called neck line resistance, with the middle trough (the head) much deeper than the ideal and left shoulder.

The cost of FTM has actually just recently gone through a comparable cost trajectory, as displayed in the chart below. As an outcome, FTM has a typical resistance in the variety specified by $2.55 to $2.74, which includes the length of the inverted head and shoulders pattern.

FTM/USD everyday cost chart including inverted head and shoulders pattern. Source: TradingView

Could Fantom rally by another 50%?

In a best world, an IH&S pattern would typically lead to a bullish breakout once the cost closes decisively above the neck line level. Ideally, the upside target amount to the optimum range in between the neck line and the head, when determined from the breakout point.

On Monday, FTM practically finished its IH&S development by reaching its neck line. As an outcome, the Fantom token’s next relocation might be a bullish breakout above the $2.55 to $2.74 resistance variety. In doing so, it would pursue a run-up towards $4.33, based upon the setup provided in the chart below.

FTM/USD everyday cost chart including the IH &S’s breakout setup. Source: TradingView

A sharp cost pullback from the neck line variety, accompanied by a spike in volume, would run the risk of revoking the IH&S setup. In that case, the next perfect assistance line might come near $2.08. This would be based upon FTM’s volume profile noticeable variety (VPVR), a metric that shows trading activity over a specific duration at defined cost levels.

FTM/USD everyday cost chart including volume profile target. Source: TradingView

Are there threats of overvaluation?

Downside threats in the Fantom market likewise appeared in the type of its relative strength index (RSI), a metric that determines the magnitude of the possession’s current cost modifications to assess its overbought or oversold conditions.

Relative Strength Index in a nutshell. Source: Investopedia

In information, FTM’s everyday RSI got in an overbought area onJan 3 as its reading partially leapt above 70. The technical sign recommends FTM is overbought which it must go through a specific degree of correction to neutralize its market belief.

In layperson’s terms, an RSI reading above 70 is typically viewed as a signal to offer. However, the sell-offs usually do not always come right after RSI delves into the overbought zone.

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Based on several RSI corrections found in between August and September 2021, the FTM cost appears to extend its benefit momentum even after the sign crosses above 70. At its finest, the everyday RSI had actually reached practically 89 onSep 9, accompanying the FTM cost striking the then-record high of $1.99.

FTM/USD everyday cost chart including RSI-led corrections. Source: TradingView

That rather leaves FTM with the possibility of pursuing its IH&S earnings target of $4.33 in spite of its overvaluation threats. What might follow is a correction towards its 20-day rapid moving average (20-day EMA; the green wave in the chart above) around $2.09.

This would bring the cost close to the VPVR assistance at $2.08, as talked about above.

The viewpoints and views revealed here are entirely those of the author and do not always show the views ofCointelegraph com. Every financial investment and trading relocation includes danger, you ought to perform your own research study when deciding.



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