beincrypto.com
Compound (COMP) had been increasing at an accelerated rate since Dec. 3 but was rejected by a long-term resistance area yesterday.
While short-term decreases could occur, COMP is expected to eventually resume its upward movement to target resistances.
COMP Breakout Leads to Pump
The COMP price has been increasing since it reached an all-time low of $80.62 on Nov. 3. After three unsuccessful attempts, COMP broke out above the $127 resistance area on Dec. 3 and has been moving upwards at an accelerated rate since.
Yesterday, COMP reached a high of $179.48 but was rejected and created a shooting star candlestick (shown with the red arrow below).
The rejection occurred right at the 0.5 Fib retracement level of the entire previous decrease, solidifying the $177 area as resistance. The breakout level at $127 is now likely to act as support.
Technical indicators in the daily time-frame are leaning bullish. Both the MACD and RSI are increasing, and while the Stochastic oscillator is close to making a bearish cross, it has yet to do so.
As long as COMP is trading above the $127 area, it is expected to eventually make another attempt at breaking out.
Short-Term Movement
The two-hour chart shows a minor resistance area between $129-$139, the 0.5-0.618 Fib retracement levels of the most recent upward move.
Currently, COMP has decreased below the previous support at $155 and is in the process of validating it as resistance. If it gets rejected, a decrease towards the $129-$139 range would be likely.
Both the MACD and RSI support the possibility of this downward move, aligning with the shooting star rejection.
COMP Wave Count
Cryptocurrency trader @Thetradinghubb outlined a COMP chart, stating that the breakout from the parallel channel indicates that the current movement is likely an impulse, giving a target of $210 for a possible local top.
It does indeed look like COMP initiated a bullish impulse (shown in orange below) on Nov. 3. This possibility is strengthened by the ensuing breakout from the parallel channel, even if COMP has fallen back inside it since.
If accurate. the price is currently in wave 4, which is expected to be completed near $139, before another eventual upward move.
A likely target for the top would be found at $260, which is the 3.61 Fib extension of wave 1 and a horizontal resistance level since August.
Conclusion
After a short-term decrease towards $139, the COMP price is expected to resume its upward movement towards $176, possibly reaching an eventual high near $260.
Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.