COMP: Unraveling the DeFi AdventureCOMP is the native governance token of the Compound protocol, which is a decentralized lending platform built on the Ethereum blockchain. As a DeFi (Decentralized Finance) project, Compound allows users to lend and borrow cryptocurrencies by providing collateral. COMP token holders have the power to propose and vote on changes to the protocol, influencing its governance and development. Its uniqueness lies in its role as a governance token, enabling users to have a say in the direction of the platform. As of the latest data, COMP's market cap stands at approximately $2.5 billion, and it is ranked among the top 50 cryptocurrencies by market capitalization.
Where have we come from?
Downtrend and Key Resistance:
Since September 7, 2021, COMP has been experiencing a downtrend, marked by four unsuccessful attempts to break the key resistance at $530.15. This resistance level holds significant importance for the asset's future price action.
Major Support Formation:
On June 18, 2022, COMP found major support at $26.15, leading to a swift retracement back to $28.75, representing a 10.25% swing to the upside in a single trading day. This support zone altered COMP's direction and pushed its price near the resistance at $71.15, leading to a period of sideways movement before a temporary break of the previous support, resulting in a lower low.
Breakout of Downtrend:
Despite the lower low indicating a bearish narrative, the robustness of the previous support at $26.15 and $28.75 propelled COMP to skyrocket, breaking the established long-term downtrend.
What's Next?
Resistance Level and Areas of Interest (AOI):
Since breaking the downtrend, COMP has seen a 117% rise to the resistance level at $79.55, which has been an area of interest since early May 2022. Understanding these key areas provides insights into possible future price movements.
Key Levels to Watch:
Currently, COMP has yet to break and hold the key level at $71.15, as well as the further resistance at $79.55, indicating potential weakening of the bullish sentiment. A break and sustained hold of the $71.15 level is crucial, as it plays a significant role in traders' psychology and valuations.
Where Do We Sit?
ROBO Advisor Sentiment:
ROBO advisors are bullish on major longer-term timeframes (weekly, daily, 3-hourly). However, they are showing signs of weakness on lower timeframes like the 45-minute and 15-minute intervals.
50-Day EMA:
The current 50-day Exponential Moving Average (EMA) is above $55, and it is plausible to expect a revisit of this level in the coming days or weeks.
Urgency for Upside Movement:
Although the majority of the chart and ROBO advisors indicate a bullish sentiment, action is required sooner or later if COMP is to continue moving upwards.
As with any investment decision, it is important to consider multiple factors, conduct thorough research, and manage risk effectively. Technical analysis offers valuable insights but does not guarantee future price movements.
