Internet Computer: Correction risk rises after ICP price gains nearly 60% in 5 days

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Internet Computer (ICP) entered in 2022 with a bang.

The price of ICP rose more than 56% in the first five days of the new year, hitting a 30-day high of $ 38 on January 5. now.

ICP / USD Daily Price Table. Source: TradingView

At the center of ICP’s recent price rally was a wave of bullish news.

This includes Binance decision this Tuesday to list a financial instrument that would allow traders to trade ICP directly to / from Ethereum’s native Ether (ETH) token and the launch of Terabethia, a cross-blockchain bridge, on December 22 that allows ERC- tokens 20 Ethereum to exist natively on the Internet Computer Blockchain.

Additionally, a rally in the smart contract platform’s tokens, especially in the past seven days, may have boosted traders’ appetite for PKI.

Performance of smart contract platform tokens. Source: Messari

Downward trend intact

Still, ICP is at risk of slashing its recent gains entirely as it tends to move down within its range of descending multi-month channels.

In detail, the price of the Internet Computer token hit the channel’s upper trendline on Wednesday, exposing itself to liquidation risks. This is mainly due to the trendline history limiting ICP bullish attempts, as shown in the chart below.

Daily ICP / USD price chart showing a descending channel pattern. Source: TradingView

Meanwhile, recent data also shows that a pullback from the upper trendline has pushed the ICP price towards the lower trendline of the channel. Because of this, ICP was at risk of falling to new lows despite its bullish rebound.

Confluence of resistance

Further clues to the ICP pullback pattern came from further resistance near $ 37.70 and overvaluation risks posed by the token’s Daily Relative Strength Index (RSI).

The $ 37.70 level, which helped ICP limit its bearish exposure between September and November 2021, coincides with the 0.236 Fib line on the Fibonacci retracement chart drawn from the around $ 89 high to the 22 low. $.

Meanwhile, the RSI reading at the time of publication was found to be close to 67.50. A value above 70 will make ICP an overbought asset which may amount to some degree of price correction / consolidation. If that happens, the ICP price could risk falling to the 0 Fib line near $ 22.

Related: Dfinity Insiders Reportedly Selling PKIs and Hurt Retail Investors

Conversely, a close above the $ 37.70 level could have Internet Computer Eye’s next bullish target of $ 47.50.

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 comes with risk, you should do your own research before making a decision.