'Falling wedge' breakthrough zone has ICP looking to make a 50% move in the short term

Currently, the 50-day exponential moving average of ICP's price is hovering just around $20.

After hitting a record low of $14.50 on Feb. 24, the price of Internet Computer (ICP) reversed course and has since risen by over 30%. The 35th-largest digital asset by market value looks to have more space to expand in the coming weeks.

ICP breaks out of a "falling wedge."

ICP's daily chart shows two descending, converging trendlines that connect lower highs and lower lows. The two lines meet in a way that shows that the bearish momentum is slowing down. People who follow the rules of traditional analysis think that when the market breaks out of a wedge, it will be a good thing.

ICP/USD was near $17.75, as shown in the chart below. It broke above it on March 22 and kept going up in the next day's trading. This was accompanied by a rise in the number of people trading. In general, it shows a strong fall wedge breakout in action.

ICP/USD daily price chart featuring a 'falling wedge' setup
ICP/USD daily price chart featuring a 'falling wedge' setup. Source: TradingView

In a "perfect" case, breaking out of a falling wedge pattern to the upside can lead to a price rise as far as the distance between the wedge's upper and lower trend lines. That could put ICP on its way to over $27 by April.

However, there is also a chance that ICP's breakout mode comes to an end near $20, where the resistance trendline of its multi-month descending channel meets. Still, it would leave the Internet Computer token with a 20% chance of going up before the next downturn.

ICP's price is still at risk of going down.

A veteran stock market investor, Tom Bulkowski, says that falling wedges are bad at predicting bullish chart patterns. He says that they work well when predicting a "downward breakout in a bear market," but not when predicting bullish chart patterns.

ICP has been in a bear market since its May 2021 launch on the crypto exchanges, with its price falling more than 90% from its start rate of around $240. Following claims that DFINITY, the company that made the Internet Computer token, sold billions of dollars worth of them while keeping early investors from selling their shares, the token fell in value.

The Bitcoin (BTC) and other cryptocurrency markets also had a correction, which made ICP's bullish prospects look less bright than they were.

It's important to note that the relationship between Bitcoin and Internet Computer has been mostly positive since the ICP began trading on exchanges. In other words, when the price of Bitcoin goes down, ICP tends to go down as well.

ICP/USD daily price chart. Source: TradingView
ICP/USD daily price chart. Source: TradingView

Following a fall wedge breakout, ICP is still looking for more bullish confirmation as it trades below its 50-day exponential moving average (50-day EMA; the red wave). This is a strong resistance level since September 2021, when ICP hit it.

The price of ICP could fall more than 20% if it doesn't break above the 50-day EMA.

** Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of USA GAG nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

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