COMP: Unraveling the DeFi Adventure
COMP is the native governance token of the Compound protocol, which is a decentralized lending platform built on the Ethereum blockchain. As a DeFi (Decentralized Finance) project, Compound allows users to lend and borrow cryptocurrencies by providing collateral. COMP token holders have the power to propose and vote on changes to the protocol, influencing its governance and development. Its uniqueness lies in its role as a governance token, enabling users to have a say in the direction of the platform. As of the latest data, COMP's market cap stands at approximately $2.5 billion, and it is ranked among the top 50 cryptocurrencies by market capitalization.
Where have we come from?
Downtrend and Key Resistance:
Since September 7, 2021, COMP has been experiencing a downtrend, marked by four unsuccessful attempts to break the key resistance at $530.15. This resistance level holds significant importance for the asset's future price action.
Major Support Formation:
On June 18, 2022, COMP found major support at $26.15, leading to a swift retracement back to $28.75, representing a 10.25% swing to the upside in a single trading day. This support zone altered COMP's direction and pushed its price near the resistance at $71.15, leading to a period of sideways movement before a temporary break of the previous support, resulting in a lower low.
Breakout of Downtrend:
Despite the lower low indicating a bearish narrative, the robustness of the previous support at $26.15 and $28.75 propelled COMP to skyrocket, breaking the established long-term downtrend.
What's Next?
Resistance Level and Areas of Interest (AOI):
Since breaking the downtrend, COMP has seen a 117% rise to the resistance level at $79.55, which has been an area of interest since early May 2022. Understanding these key areas provides insights into possible future price movements.
Key Levels to Watch:
Currently, COMP has yet to break and hold the key level at $71.15, as well as the further resistance at $79.55, indicating potential weakening of the bullish sentiment. A break and sustained hold of the $71.15 level is crucial, as it plays a significant role in traders' psychology and valuations.
Where Do We Sit?
ROBO Advisor Sentiment:
ROBO advisors are bullish on major longer-term timeframes (weekly, daily, 3-hourly). However, they are showing signs of weakness on lower timeframes like the 45-minute and 15-minute intervals.
50-Day EMA:
The current 50-day Exponential Moving Average (EMA) is above $55, and it is plausible to expect a revisit of this level in the coming days or weeks.
Urgency for Upside Movement:
Although the majority of the chart and ROBO advisors indicate a bullish sentiment, action is required sooner or later if COMP is to continue moving upwards.
As with any investment decision, it is important to consider multiple factors, conduct thorough research, and manage risk effectively. Technical analysis offers valuable insights but does not guarantee future price movements.
Where have we come from?
Downtrend and Key Resistance:
Since September 7, 2021, COMP has been experiencing a downtrend, marked by four unsuccessful attempts to break the key resistance at $530.15. This resistance level holds significant importance for the asset's future price action.
Major Support Formation:
On June 18, 2022, COMP found major support at $26.15, leading to a swift retracement back to $28.75, representing a 10.25% swing to the upside in a single trading day. This support zone altered COMP's direction and pushed its price near the resistance at $71.15, leading to a period of sideways movement before a temporary break of the previous support, resulting in a lower low.
Breakout of Downtrend:
Despite the lower low indicating a bearish narrative, the robustness of the previous support at $26.15 and $28.75 propelled COMP to skyrocket, breaking the established long-term downtrend.
What's Next?
Resistance Level and Areas of Interest (AOI):
Since breaking the downtrend, COMP has seen a 117% rise to the resistance level at $79.55, which has been an area of interest since early May 2022. Understanding these key areas provides insights into possible future price movements.
Key Levels to Watch:
Currently, COMP has yet to break and hold the key level at $71.15, as well as the further resistance at $79.55, indicating potential weakening of the bullish sentiment. A break and sustained hold of the $71.15 level is crucial, as it plays a significant role in traders' psychology and valuations.
Where Do We Sit?
ROBO Advisor Sentiment:
ROBO advisors are bullish on major longer-term timeframes (weekly, daily, 3-hourly). However, they are showing signs of weakness on lower timeframes like the 45-minute and 15-minute intervals.
50-Day EMA:
The current 50-day Exponential Moving Average (EMA) is above $55, and it is plausible to expect a revisit of this level in the coming days or weeks.
Urgency for Upside Movement:
Although the majority of the chart and ROBO advisors indicate a bullish sentiment, action is required sooner or later if COMP is to continue moving upwards.
As with any investment decision, it is important to consider multiple factors, conduct thorough research, and manage risk effectively. Technical analysis offers valuable insights but does not guarantee future price movements.
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Navigating Key Levels and Trends:
In our ongoing analysis of COMP, we will delve deeper into the latest developments and refined indicators. As we navigate through this complex cryptocurrency landscape, understanding key levels and trends remains crucial.
Revised AOIs and Fibonacci Retracement:
A significant update to our analysis includes refined Areas of Interest (AOIs) and the introduction of a Fibonacci retracement level. This retracement level, represented by the .618 Fib, spans from the lowest point observed on June 10th to the peak on July 2nd. This addition provides us with an additional tool to gauge potential price movements.
Key Price Levels:
Previously highlighted, but still crucial, are the following key price levels:
$71.15 Resistance: This level has proven to be a formidable barrier, with substantial selling pressure observed around this price point.
$79.55 Extremity: COMP's price made a final attempt to breach this level on July 31st, which was swiftly followed by a substantial sell-off.
EMA Crossover and Trend Analysis:
A significant shift in the technical landscape is the recent crossover of the 50-day Exponential Moving Average (EMA) below the 200-day EMA. This crossover indicates a return to a bearish bias in the overall trend.
Oscillator and Potential Reversal Indicators:
While the overall trend appears bearish, there are indications of potential reversals. The oscillator at the bottom of the chart signals an increase in buying pressure, coupled with a 20-day EMA crossover and a potential divergence. These factors collectively suggest a relatively bullish narrative.
However, it's essential to maintain a cautious stance. The price may be inclined to test the $36.35 price level. To confirm a bullish trajectory from this point, COMP needs to surpass the $41.25 level with strong buying interest. This could potentially lead to a rally toward the next significant resistance at $57.75.
Possible Scenario:
Failure to Break .618 Fib
Failure to breach the .618 Fib level may trigger a sell-off, potentially testing the support at $30.50. Such a move would constitute a 22% drop from the current price and signal a deeper correction.
ROBO's Bearish Signal and Trading Strategy
It's important to note that ROBO has maintained a bearish stance since August 6th, indicating a persistent bearish sentiment.
A short position was initiated on July 31st, supported by a confirmation of a bearish divergence and a significant outflow of capital from COMP. The exit strategy for this short position was set at the .618 level, specifically at $41.25.
Short-Term Perspective and EMA Trend:
A short-term analysis of the 4-hourly COMP chart reveals that the initial support was found around $41.25. However, the price eventually broke below this level, entering the lower extremity of the AOI zone at $35.45. Notably, this lower point was confirmed by a 20-day EMA crossover on the 4-hour chart, which occurred on September 12th.
Looking Ahead: Breaking the Downtrend
As we navigate the evolving landscape of COMP, a critical factor to watch is the potential break above the downtrend line. A confident open and close above this trendline would be a significant technical development.
The 4-hourly EMA trend currently favors the bears, indicating the potential for a substantial move in the next 1 to 3 days. Traders and investors should remain vigilant, with a keen eye on key levels and trend confirmations, as COMP continues its journey in the cryptocurrency market.