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Disclaimer: The information presented does not constitute financial advice, investment advice, trading advice or any other form of advice and is solely the opinion of the writer
- Composite bulls were excited after the recent gains
- It was possible that COMP could follow a significant portion of the recent rally, and buyers could be on the hunt for the ideal entries
Link [COMP] posted a double-digit percentage gain in the past 24 hours. The governance token fell to $38.24 on September 26, but rose to $50.28 on September 28. This represented a 31.5% northward movement in less than two days.
Read Compounds [COMP] Price forecast 2023-24
While it may be attractive to think that the bulls can push prices higher, it may be wiser to wait for a retracement. How low could COMP fall, and would such a scenario be a realistic expectation?
The move was almost vertical, but COMP traders should beware of FOMO
Source: COMP/USDT on TradingView
The four-hour chart noted that the $42.92 was a local high that Compound recorded on September 16. Furthermore, the cyan box represented a former bearish order block on the daily chart, which reached from $40.68 to $44.44.
When COMP broke the $42.9 and $44.44 levels in the last few hours, it showed that the bulls were in full control of the market and the sentiment was euphoric. This move indicated bullish dominance and showed that COMP could quickly move past the $50 level.
But before that, we could see a retest of the former bearish order block, now a bullish breaker block. This zone coincides with a fair value gap on the H4 chart from $41.79 to $42.94, and a retest would provide an ideal buying opportunity.
Another thing traders can look for is a rejection near the resistance at $51.9. Over the next few days, such a rejection would allow traders to chart the Fibonacci retracement levels for the rally and determine where to go long.
The Open Interest chart reflected intense bullish sentiment
Source: Coinalyse
The break past $44.44 was accompanied by a huge spike in Open Interest. It rose from $25.5 million to $46 million. This massive jump was due to bullish speculators entering the market in droves, indicating strong bullish conviction.
How much is 1, 10 or 100 COMP worth today?
The spot Cumulative Volume Delta (CVD) also jumped higher and the financing rate was positive. Still, it doesn’t rule out the possibility of a retracement. Based on the price action, a drop to the $42-$44 region could provide a good risk-reward buying opportunity, targeting $51.9.