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Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Despite strong gains in September, ATOM failed to overcome a key price hurdle.
- Weak funding rates indicated that speculators were taking a cautious approach.
ATOM’s strong recovery from the $6.2 price zone stalled at the $7.5 price level in September. Previously, the bulls had staged a strong rally between September 12 and September 19 with an 18% gain.
Read Kosmos’ [ATOM] Price forecast 2023-24
However, the inability of buyers to move past the $7.5 price level, along with ATOM’s bearish structure at the higher futures, caused sellers to return to the market.
This resulted in a 7% dip, with buyers finding some respite at the nearby $7 support.
The bearish structure limits the bullish recovery
Source: ATOM/USDT on Trading View
The 12-hour time frame showed the short bullish run that ATOM buyers enjoyed. This was reflected in the Relative Strength Index (RSI) rising from the lower to the higher range.
Despite the bullish run, On Balance Volume (OBV) continued to decline, which was a negative sign for bulls. As volume dropped, the bears took advantage to halt the bullish rally.
With the RSI back in the lower range and the OBV down over 3 million, the continuation of the bullish rally would depend on buyers defending the $7 support level.
A successful defense would cause the bulls to move towards the $7.5 price level again. Otherwise, a break below the $7 support could mean a further decline towards $6.5.
Funding rates have wavered along with declining open interest rates
Source: Coinalyse
Market speculators took a vigilant stance after the ATOM price drop. The Open Interest (OI) showed an upward trend between September 11 and September 20, but fell sharply on September 21.
How much are 1,10,100 ATOMs worth today?
This indicated a reduction in positions by speculators in anticipation of further declines. The cautious approach extended to financing rates, as they fluctuated between positive and negative over the 12H period.
Overall, traders should monitor Bitcoin closely [BTC] short-term price action as a bullish or bearish swing of the king coin would impact the price of ATOM in the meantime.