Fantom (FTM) looks poised to hit a recent file high in the arriving sessions after its 125% tag rebound from $1.23 on Dec. 14, 2021, to $2.84 on Jan. 3, 2022, introduced on a standard bullish reversal setup.
Dubbed inverse head and shoulders (IH&S), the setup looks when an asset kinds three troughs underneath a so-known as neckline resistance, with the center trough (the pinnacle) deeper than the left and appropriate shoulder.
The price of FTM has lately gone by device of a an analogous tag trajectory, as shown in the chart underneath. As a result, FTM has a now not new resistance in the fluctuate defined by $2.55 to $2.74, which encompasses the size of the inverse head and shoulders sample.
Would possibly possibly well well additionally Fantom rally by but every other 50%?
In a finest world, an IH&S sample would most frequently finish in a bullish breakout as soon as the price closes decisively above the neckline stage. Ideally, the upside purpose will be equal to the utmost distance between the pinnacle and the neckline, when measured from the breakout level.
On Monday, FTM almost performed its IH&S formation by reaching its neckline. As a result, the Fantom token’s subsequent cross most frequently is a bullish breakout above the $2.55 to $2.74 resistance fluctuate. In doing so, it would possibly per chance most likely pursue a glide-up in direction of $4.33, per the setup supplied in the chart underneath.
A keen tag pullback from the neckline fluctuate, accompanied by a spike in quantity, would risk invalidating the IH&S setup. If that is the case, the subsequent ideal abet line would possibly come near $2.08. This will be per FTM’s quantity profile viewed fluctuate (VPVR), a metric that shows trading enlighten over a specified length at specified tag phases.
Are there dangers of overvaluation?
Downside dangers in the Fantom market also looked in the invent of its relative energy index (RSI), a metric that measures the magnitude of the asset’s most contemporary tag adjustments to mediate its overbought or oversold stipulations.
Intimately, FTM’s everyday RSI entered an overbought territory on Jan. 3 as its reading marginally jumped above 70. The technical indicator suggests FTM is overbought and that it’s miles going to undergo a definite stage of correction to neutralize its market sentiment.
In layman’s terms, an RSI reading above 70 is continuously viewed as a signal to promote. However, the promote-offs most frequently fabricate no longer essentially come appropriate after RSI jumps into the overbought zone.
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Basically based on more than one RSI corrections seen between August and September 2021, the FTM tag looks to elongate its upside momentum even after the indicator crosses above 70. At its simplest, the everyday RSI had reached almost 89 on Sep. 9, coinciding with the FTM tag hitting the then-file high of $1.99.
That considerably leaves FTM with the prospective for pursuing its IH&S revenue purpose of $4.33 despite its overvaluation dangers. What would possibly be conscious is a correction in direction of its 20-day exponential transferring common (20-day EMA; the green wave in the chart above) around $2.09.
This would possibly bring the price merely relating to the VPVR abet at $2.08, as discussed above.
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