While Internet Computer (ICP) fell to a new all-time low on Feb 22, it has bounced slightly and is showing early signs of a potential bullish reversal.
ICP has been falling alongside a descending resistance line since reaching a high of $87 on Sept 6. So far, it has decreased by 79%, leading to a new all-time low of $16.81 on Feb 22.
The decrease also caused a breakdown from the $29 horizontal support area.
ICP has bounced slightly since and could soon make an attempt at breaking out from the descending resistance line. If so, the $29 area would now be expected to provide resistance.
Has ICP reached a bottom?
Cryptocurrency trader @PrinceofElliott tweeted a chart of ICP, stating that the price could soon reach a long-term bottom and begin a significant upward movement.
The daily chart shows signs of a potential trend reversal, visible in the form of a very significant bullish divergence (green lines) in both the MACD and RSI.
Such pronounced divergences usually preceded bullish trend reversals. Therefore, they suggest that an eventual breakout from the resistance line is expected.
If the $32 area is reclaimed, then the next resistance would be all the way at $58. This is a horizontal resistance area and coincides with the 0.618 Fib retracement resistance level when measuring the entire drop.
Wave count analysis
The wave count suggests that ICP has completed a five wave downward movement or is very close to doing so. Wave five has taken the shape of an ending diagonal, which implies that the ensuing reversal is likely to be swift.
The impulse also has compatible Fib ratios. Wave five is 0.618 the length of wave three (black), while wave one has the length of the other two waves combined, since it is the one that extended.
As a result of the confluence of all these factors, it is possible that ICP has reached a bottom or will do so in the very near future.
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