- COMP price has flashed sell signals on the daily timeframe, hinting at a trend reversal.
- Bearish divergence on the daily chart suggests COMP could shed 30% of its market value and tag $50.
- A daily candlestick close above the $76 hurdle that flips it into a support floor will invalidate the bearish thesis.
COMP price seems to be rallying despite clear signs of waning momentum on the daily timeframe. This development is screaming ‘sell’ and is a warning to the holders of the Compound platform’s token of an incoming drop.
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COMP price ready to undo recent gains
COMP price set up two higher highs on July 2 and July 15 at $71 and $76, which at first look seems normal. But on closer observation, investors can note that this uptrend is ready to reverse.
The Wave Trend indicator flashed a bearish crossover on July 7 in the overbought region, which signals that it is time to sell. But COMP price continued to rally higher and set up a higher high on July 15, as mentioned above. This uptick, despite the sell signal, led to the formation of a bearish divergence, which is the second sell signal
The Relative Strength Index (RSI) and Awesome Oscillator (AO) have both set up lower highs, while COMP price has created a higher high. This setup is termed bearish divergence and often results in a downtrend.
COMP/USDT 1-day chart
While the correction outlook for COMP price is based on multiple sell signals, the crypto market recently and suddenly flipped bullish due to the SEC vs. Ripple lawsuit decisions. Hence, a sudden spike in buying pressure in Bitcoin or altcoins is not unlikely.
Under these circumstances, if COMP price produces a daily candlestick close above the $76 hurdle and flips it into a support floor, it will invalidate the bearish thesis. In this case, Compound bulls could propel altcoin to $80.
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