Fantom has retraced by more than 27% since May 5.
FTM has now reached a vital support level.
A spike in buying pressure could push the asset to $0.80 or even $1.
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Fantom is hovering around a vital demand zone that has historically served as a rebound zone. Similar price action could see the Layer 1 asset surge toward $0.80 or higher.
Fantom Prepares to Rebound
Fantom appears to have reached a crucial area of support that may help prices rebound if it continues to hold.
The Layer 1 blockchain’s FTM token has endured a steep correction over the past few days after suffering a rejection at the $0.87 resistance level. Fantom has seen its price drop by more than 27% since May 5, recently hitting a low of $0.63. Now, the downtrend appears to be reaching exhaustion, which could result in a bullish impulse.
Fantom has begun testing the lower trendline of a parallel channel that has developed on its 12-hour chart. The vital support level has prevented further losses since early January, leading to an upswing to the pattern’s upper boundary every time it has been tested. Similar price action could see FTM rebound to $0.80 or even $1.
The Tom DeMark (TD) Sequential indicator adds credence to the optimistic outlook as it is preparing to present a buy signal on the 12-hour chart. The bullish formation looks set to develop as a red nine candlestick, which is indicative of a one to four candlesticks rebound. Moreover, Fantom appears to be creating a bullish divergence against the RSI within the same timeframe.
Although the odds favor the bulls, uncertainty across the crypto and global financial markets could cause a downswing. Due to the rocky climate, many crypto assets have been bleeding over the past week, with Bitcoin hitting a 10-month low earlier this afternoon.
If Fantom sees a spike in selling pressure and breaks below $0.62, the short-term optimistic outlook could be invalidated. Under such unique circumstances, Fantom could extend its losses toward the $0.50 support level.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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