(Akash Girimath – FXStreet)
– COMP price shows a slowdown in bullish momentum at $55.95, a high-time-frame resistance level.
– A retracement of the range’s midpoint at $41.02 or $35 seems plausible if investors start to book profits.
– A daily candlestick close above $55.95, that flips it into a support level will invalidate the bearish thesis for COMP.
COMP price is consolidating in a tight range, trying to establish a directional bias after a quick recovery rally. Depending on which camp wins, COMP is likely to head in that direction. However, judging by the market structure, a pullback seems likely.
COMP price stuck in limbo
COMP price bounced 115% between June 18 and June 25, more than doubling its value and setting up a swing high at $56.34. Due to the presence of a high-time-frame resistance level at $55.95, Compound took a U-turn.
This led to a 19% correction where COMP price is currently trading between the 8-day and 34-day Exponential Moving Averages (EMAs). These barriers and the coiling up suggest that the volatility is dry and that an explosive move is around the corner.
If Bitcoin price takes a dive, COMP price is likely to follow. In such a case, Compound bears might knock the altcoin down by 12% to retest the 50% fibonacci retracement level at $41.02. However, if the selling pressure continues to build up, a further descent seems plausible.
Such a development could see COMP price explore the deep discount mode, extending from $32.41 to $37.46. Investors can expect this downtrend to stabilize in this zone.
While things are looking slightly bearish for COMP price, a daily candlestick close above the high-time-frame resistance barrier at $55.95 will jeopardize the bears’ plans. If this move flips the said hurdle into a support level, it will invalidate the bearish thesis for COMP.
If buying pressure continues to build up, COMP price could trigger a 25% ascent to the $70.27 hurdle.