Cosmos (ATOM) price is preparing to break out of a long-term formation. This shows that the altcoin could lead to a strong rally afterwards.
ATOM has been trading within a descending parallel channel since September 2022. This is known as a bullish pattern, which in most cases leads to breakouts. However, after bouncing up from the middle of the channel during the week of January 22-28, the price rebounded. As a result, it is currently in the process of moving above the channel.
Trading volume increased as the price rose, indicating that the bulls were buying at higher levels.
As Koinfinans.com reported, the weekly RSI is approaching the overbought zone and is leaning upwards, supporting a potential breakout. If ATOM price breaks above the channel this week, it looks like it could rise 59.66% to the next resistance level at $22.
The daily chart shows that ATOM price broke above the horizontal resistance zone at $12.5 on March 6. The breakout confirmed the validity of the breakout by creating a large bullish candle with high trading volume.
The daily RSI rose into the overbought zone but did not create any bearish divergence, indicating that the bulls are still in control of the market. Therefore, the price may rise towards the next horizontal resistance level at $15.5 in the coming days.
This will also increase the chances of ATOM price closing the weekly candle above the descending parallel channel.
The most likely outlook shows that the ATOM price will continue to rise in the near future. The closest target seems to be towards $15.5 and $22. The bullish view could be invalidated if the price declines and closes below the $12.5 level on the daily time frame.
