Compound (COMP) – Retaining a strong bullish tonePosted on Thursday, December 23 2021 at 10:07 pm GMT+0000
Compound (COMP), the algorithmic autonomous interest rate protocol, built for developers, has been sloping downward with a series of lower tops and lower bottoms since the 3rd of November. However, the completion of an inverse head and shoulder pattern reversed this downtrend and opened the way north.
Technically, an inverse head and shoulders pattern predicts a bearish-to-bullish trend reversal and is considered one of the most reliable trend reversal patterns.
Technical indicators and the bullish price action are fully in sync as the MACD is holding above both the signal and zero lines. Also, the DI+ and DI- plots are positively intersected and diverging sharply with the DI+ aggressively pointing upwards. A spike in Volume is also noticeable at the break of the H&S neckline.
Although they could face some resistance, buyers should continue to push in the direction of the head and shoulders technical target at 256. Along the way, preliminary resistance could transpire from the 26th of November low at 245 but with the current momentum, this barrier shouldn’t be hard to break.
In case of any bearish correction, the price should find support around the zone of the H&S neckline around 216. If this barricade fails to halt the decline, the right shoulder bottom at 182 will serve as the last line of defense. A break of this critical trough will invalidate the bullish trajectory and trigger concerns for a prolonged decline towards the 15th of December low at 175.
Overall, the current outlook for Compound is bullish, momentum is strong, and the price is on its way towards 256. If a bearish correction commences, the 216-210 zone will serve as a good buying zone for anyone looking to capitalize on this bullish move.