Internet Computer (ICP) corrected after almost 60% increase
Internet Computer (ICP) entered 2022 with a huge success. ICP price rose more than 56% in the first 5 days of the new year, hitting a 30-day high of $ 38 on Jan 5th. This upward move was accompanied by an increase in trading volume and met a strong and healthy uptrend feeling.
Internet Computer / USD price chart of the daily framework | Source: TradingView
The recent Internet Computer rally was triggered by a flurry of positive news, including Binance’s decision to be listed as a financial instrument on January 4th, allowing traders to switch directly between Internet Computer and Ether, and the launch of Terabethia , a cross-chain bridge, on December 22nd that enables Ethereum’s ERC-20 token to live natively on the internet computer blockchain.
Alternatively, a rally of smart contract tokens could have whipped traders’ appetites for Internet Computer.
Token performance smart contract | Source: Messari
Downward trend unchanged
However, the Internet Computer still risks losing all of its recent gains as it tends to trade lower within a multi-month descending channel area.
In particular, Internet Computer price touched the channel’s upper trendline on Jan 5th, so there is a risk of a sell-off. This was mainly due to the history of the upper trendline which constrained Internet Computer’s attempt to hike the price, as shown in the chart below.
ICP / USD price chart with daily frame and descending channel pattern | Source: TradingView
Meanwhile, recent data also shows that a pullback from the upper trendline has pushed ICP price towards the lower trendline of the channel. As a result, there is a risk that the ICP will drop to new lows despite the recent rally.
Against strong resistance
Further signs of ICP pullback come as it encounters further resistance near $ 37.7 and risk of overvaluation by the daily relative strength index (RSI).
The $ 37.7 level helped ICP limit the downside for September-November 2021, which coincides with the 0.236 line on the Fibonacci retracement chart from the local high of $ 89 to the low of $ 22.
Meanwhile, at press time, the RSI is close to $ 67.5. A value above 70 would make ICP an overbought asset, potentially leading to a price correction / consolidation to some extent. If this happens, there is a risk that ICP price will fall to the 0 Fib line near $ 22.
Conversely, a close above $ 37.7 could give ICP momentum towards the next upside target at $ 47.5.
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