Phantom (FTM) seems to reach all-time highs in the coming sessions after its 125% bounce from $ 1.23 on December 14, 2021 to $ 2.84 on January 3, 2022 triggered a classic bullish reversal.
An inverted head and shoulders (IH&S) layout occurs when an asset forms three bottoms below what is called neck resistance, and the middle bottom (head) is deeper than the left and right shoulders.
The FTM price recently underwent a similar price path as shown in the chart below. As a result, the FTM has a total resistance in the range of $ 2.55 to $ 2.74 that extends along the inverted head and shoulder pattern.
FTM / USD daily price chart in an inverted head and shoulder pattern. Source: TradingView
Can the Phantom grow by another 50%?
In the ideal world, an IH&S pattern will usually give a bullish outburst when the price closes decisively above the neck. Ideally, the target at the top should be equal to the maximum distance between the head and neck measured from the point of penetration.
On Monday, the FTM almost completed the IH&S formation, and hit the neck. As a result, the next move in the Fantom coin could be a bullish breakout over the $ 2.55 to $ 2.74 resistance range. At the same time, it will strive to grow to $ 4.33, based on the chart presented in the table below.
FTM / USD daily price chart with IH&S breakout setup. Source: TradingView
A sharp drop in prices from the neck series, accompanied by a sharp jump in volume, can invalidate the IH & S setup. In this case, the next ideal helpline could approach $ 2.08. This will be based on the visible area of the Volume Profile FTM (VPVR), which is a calculation that shows trading activity over a specified period at specified price levels.
FTM / USD daily price chart with target volume profile. Source: TradingView
Is there a danger of overestimation?
The downside risk in the Phantom market is also manifested in the Relative Strength Index (RSI), a measure that measures the extent of recent changes in an asset price to assess whether it is overbought or oversold.
Briefly about RSI. Source: Investopedia
In particular, the daily RSI FTM entered the overbought territory on January 3, when the value jumped slightly above 70. The technical indicator indicates that the FTM is overbought and that it should go through a certain degree of correction to neutralize market sentiment.
From a layman’s perspective, an RSI reading above 70 is usually seen as a sell signal. But sales do not necessarily happen immediately after the RSI crosses overbought.
About this topic: 5 cryptocurrency projects that made friends in 2021
Based on several RSI corrections found between August and September 2021, it appears that the FTM price will continue to rise even after the index has crossed the 70 limit. At best, the daily RSI reached around 89 on 9 September, which is in line with the price of the FTM. Reached a record high at the time of $ 1.99.
FTM / USD price daily chart with corrections caused by RSI. Source: TradingView
This leaves some room for FTM to reach IH & S’s performance target of $ 4.33 despite the risk of overestimation. This could be followed by a correction of its 20-day EMA (20-day EMA; green wave in the chart above) around $ 2.09.
This will bring the price close to VPVR support to $ 2.08 as discussed above.