The COTI price has fallen below a crucial long-term support level, but is trading inside a bullish pattern and has shown several bullish reversal signs.
A breakout from the current pattern would likely indicate that the price has reversed its trend and has begun an upward move.
COTI Breaks Down from Long-Term Support
The COTI price has been decreasing since it reached a high of $0.098 on Aug 31. The decrease has been swift, culminating with a breakdown from a long-term ascending support line and the $0.033 support area at the end of September. The same area is now likely to act as resistance.
If the price continues decreasing, the closest support area is found at $0.024.
In the daily time-frame, technical indicators are bullish but do not yet confirm the reversal.
The strongest bullish sign is given by the bullish divergence that has developed in the RSI. The MACD is also increasing but has not crossed into positive territory yet. A bullish cross in the stochastic oscillator would likely confirm that the price is heading upwards.
These readings forecast a scenario in which COTI bounces once it reaches the $0.024 area and begins a new upward move.
Cryptocurrency trader @CryptoNTez outlined a COTI chart that shows potential bullish reversal signs along with a possible breakout from a descending wedge.
COTI indeed looks to have been trading inside a descending wedge since Sept 5. Besides the fact that the wedge is normally considered a bullish pattern, there is a very significant bullish divergence developing in the 6-hour RSI, making a potential breakout likely.
If so, the closest resistance area would be found at $0.042. This level is above the previous support area at $0.033, which would be expected to be reclaimed if the price breaks out from the wedge.
This would be a very bullish development since the breakout would be considered a deviation below the range low, which is oftentimes followed by a significant movement in the other direction.
The decrease since the aforementioned Aug 31 high looks like the beginning of a bearish impulse. Even though there is an overlap between waves 1 and 4 (shown in blue below), the movement looks like a leading diagonal, making this a valid count.
A breakout from the wedge could take the price all the way to $0.062. However, it is not yet certain whether the current movement is the beginning of a bearish impulse or a larger A wave in an A-B-C correction.
The shape of the movement after the ensuing breakout and length of the retracement will be helpful in determining this.
To conclude, despite falling below an important support level, COTI is trading inside a bullish pattern out of which a breakout is expected. The direction of the long-term trend is not yet clear.
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Source: Be In Crypto