Correction threat rises after ICP worth good points almost 60% in 5 days

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Internet Computer (ICP) has entered 2022 with a bang.

The ICP worth rose by over 56% within the first 5 days of the brand new yr, reaching a 30-day excessive of $38 on Jan. 5. Its large upside transfer accompanied a spike in buying and selling volumes, underscoring a powerful and wholesome bullish sentiment for now.

ICP/USD day by day worth chart. Source: TradingView

At the middle of ICP’s current worth rally was a flurry of optimistic information.

That consists of Binance’s determination this Tuesday to checklist a monetary instrument that will allow merchants to straight swap ICP to/from Ethereum’s native token Ether (ETH) and the launch of Terabethia, a cross-blockchain bridge, on Dec. 22 that allows Ethereum’s ERC-20 tokens to exist natively on the Internet Computer blockchain.

Additionally, a rally throughout the good contract platform tokens, particularly within the final seven days, might have boosted merchants’ urge for food for ICP.

Smart contract platform tokens’ efficiency. Source: Messari

Downtrend intact

Nevertheless, ICP stays vulnerable to paring its current good points completely because it trended decrease inside its multi-month descending channel vary.

In element, the Internet Computer token worth reached the channel’s higher trendline on Wednesday, thus exposing itself to selloff dangers. That is primarily as a result of trendline’s historical past of limiting ICP’s upside makes an attempt, as proven within the chart under.

ICP/USD day by day worth chart that includes descending channel sample. Source: TradingView

Meanwhile, current knowledge additionally reveals {that a} pullback from the higher trendline pushed the ICP worth in direction of the channel’s decrease trendline. For that purpose, ICP risked falling to new worth lows regardless of its bullish rebound.

Resistance confluence

More cues for ICP’s pullback setup got here from an one other resistance close to $37.70 and overvaluation dangers posed by the token’s day by day relative energy index (RSI).

The $37.70-level, which helped ICP restrict its bearish publicity between September and November 2021, coincides with the 0.236 Fib line of the Fibonacci retracement graph drawn from the circa $89-swing excessive to the $22-swing low.

Meanwhile, the RSI studying at press time got here out to be close to 67.50. A worth above 70 will make ICP an overbought asset that will quantity to a sure diploma of worth correction/consolidation. Should it occur, the ICP worth might threat falling to the 0 Fib line close to $22.

Related: Dfinity insiders alleged to have illegally offered ICP and harmed retail buyers

Conversely, closing above the $37.70-level might have Internet Computer eye $47.50 as its subsequent upside goal.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Every funding and buying and selling transfer entails threat, it is best to conduct your personal analysis when making a call.

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