Compound (COMP) gets back on its feet and attempts an upward continuity.
- The COMP is traded between the $130 support and the $175 resistance.
- The next zones of resistance are at $200 and $230.
- The COMP follows a line of short-term upward support, as well as a line of longer-term support.
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The price of Compound (COMP) has been falling since it was rejected on 8 December by the fibonacci retracement level of 0.5. However, it seems to have halted its decline and should continue to move closer to the targets indicated in this article.
Progress followed by rejection
The price of the COMP has risen since it reached a record high of $80.62 on 3 November. On 5 December, the COMP broke through the old resistance of $130, validated it as a Bitcoin Future support and then continued to rise. That said, it was rejected by the fibonacci retracement level 0.5 at $176.
Technical indicators are neutral, with an upward bias. The Stochastic Oscillator has made a bearish cross, while the MACD and RSI are rising. The RSI has also generated a large hidden bullish divergence.
If the COMP passes its resistance, the next resistance zones would be at $200 and $230, i.e. the fibonacci retracement levels 0.618 and 0.786.
The six o’clock graph shows that the COMP follows two rising lines of support. The first, long term, has been in place since the previous trough on 3rd November. The second is shorter term and dates from 6th December.
At the time of writing this analysis, the COMP was trading above the short term line and minor support at $140. This is an area which it has just regained.
If the price went below this line and the $140, the next support zone would be at $128. This coincides with the longer term upward support line.
The two hour short term chart shows that the short has passed a falling resistance line (dotted line) in addition to the support levels described above.
Once the COMP has successfully passed the $159 mark, i.e. the 0.5 fibonacci retracement of the previous decline, it should continue to rise at an accelerated pace.
The cryptomony trader @CryptoTony_ shared a chart of the COMP, indicating that the price still had a corrective rally in reserve before it finally fell.
That said, knowing that the decline has not yet reached the territory of wave 1, it seems too early to speak of a 1-2/1-2 wave formation. A more likely option would be for the COMP to have already completed wave 4, and is currently in wave 5.
There are two reasons why we think it is more likely that the COMP is now in wave 5 :
- The fourth wave ended in the middle of a parallel channel linking waves 1 and 2. This could be a 4th wave setback.
Wave 3 was almost exactly 1.61 times the length of wave 1 (fibonacci level in orange). This is a common ratio in bullish impulses.
- The most likely target for the top of wave 5 is between $236 and $239. This corresponds to the fibonacci extension 1.61 of waves 1 to 3 (in bl