The Internet Computer (ICP) price changed direction after falling near its record low of $14.50 on February 24 and has since gained more than 30%. And now, it looks like the 35th largest digital asset by market capitalization has more room to grow in the coming weeks.
ICP out of ‘falling nail’
The daily chart of ICP shows a descending wedge pattern – a setup consisting of two descending, converging trendlines connecting a lower high and a lower low. The intersecting nature of the two lines indicates a weak bearish momentum. Therefore, traditional analysts predict that a wedge breakout will be bullish.
As shown in the chart below, for ICP/USD, the wedge barrier was near $17.75. It broke above it on 22 March, and continued to rise in the next daily session with an increase in trading volume. Overall, it shows a solid falling wedge breakout in action.
In a “perfect” scenario, breaking the descending wedge pattern – up – to the maximum distance between the upper and lower trendline of the wedge can see the next price rise. This could push the ICP to more than $27 – almost 50% – sometime by April.
Nevertheless, there is also a possibility that ICP’s breakout pattern ends mid-$20, a level that coincides with the resistance trendline of its multi-month descending channel. Nevertheless, this would leave the Internet Computer Token with a potential 20% upside setup before the next pullback occurs.
Bearish risk remains for ICP price
Falling wedges tend to perform poorly when it comes to predicting bullish chart patterns, according to Tom Bulkowski, an experienced stock market investor who noted that when predicting “a downside breakout in a bear market”. They work well.
ICP has been in a bear market since its launch on crypto exchanges in May 2021, with its price falling over 90% from its first rate of around $240 (data from Binance). The token fell amid allegations that its founding company, DFINITY, dumped billions of dollars worth of internet computer tokens, as well as preventing its early investors from exiting their positions.
Furthermore, corrections in Bitcoin (BTC) and the rest of the cryptocurrency markets also dampened the ICP’s bullish prospects.
In particular, the relationship between bitcoin and internet computers has been mostly positive since the beginning of trading on ICP’s exchanges. In other words, when BTC experiences a correction, the ICP is usually looking at a downside.
Despite entering a falling wedge breakout, ICP still confirms further bullishness as it trades below its 50-day exponential moving average (50-day EMA; red wave) near $19, expected by September 2021 Since is a strong resistance level.
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Failure to mark a break above the 50-days EMA could see ICP re-enter its all-time low near $14, up more than 20% from today’s price.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.
