Fantom (FTM) price analysis 5 Jan: Strong headwinds ahead?
Fantom (FTM) may pull back in the short term after a huge rally in 2021
Fantom’s FTM token was one of the star performers of 2021, with a massive rally of about 13,000%. The token has continued its outperformance in 2022 even as other major altcoins remain range-bound.
Along with the sustained interest in Layer 1 coins, another reason that could be igniting interest in the FTM token is that the popular decentralised finance builders Andre Cronje and Daniele Sestagalli have hinted at the possible launch of a new product on the blockchain.
Cronje tweeted on 1 January that he is “deploying a new experiment on Fantom this month”.
That was followed by further teasing from Sestagalli, who told his followers that “FTM season is coming.”
Another positive sign is that the total value locked on Fantom has soared from $3.74bn on 21 December to $6.12bn currently, according to data from Defi Llama.
So will Layer 1 coins remain in focus, and will Fantom go up? Read our FTM price analysis to find out…
Fantom price technical analysis: weekly chart
FTM’s price rallied sharply from $0.19 to $2.86 and that pushed the relative strength index (RSI) above 85. This suggests that the up-move was overheated in the short term. Vertical rallies are usually followed by sharp declines, and that is what happened.
The FTM/USD pair pulled back sharply to the strong support zone between the 50% Fibonacci retracement level at $1.52 and the 61.8% retracement level at $1.21. Strong buying in this zone has again started a sharp rally, pushing the pair above $2.86.
However, the RSI has not followed the price higher, forming a negative divergence. This suggests that the rally could face headwinds at higher levels.
If bulls sustain the pair above $2.86, it will suggest traders are buying on every minor dip. That could clear the path for a possible rally to $3.50, and then to $4.09. Alternatively, if the price turns back below $2.86, it will suggest that higher levels are attracting profit-booking.
Fantom price technical analysis: daily chart
FTM’s price has rallied sharply in the past few days and is attempting to complete a V-shaped recovery. That will happen when the price breaks and sustains above $3.14.
Such a move will suggest that traders aggressively bought the dips, which would improve the prospects for a continuation of the uptrend. If the price sustains above $3.14, the next leg of the up-move could begin.
Conversely, if the price turns down from the current level, the pair could drop to $2.60. If the price rebounds off this level, the bulls will again attempt to clear the overhead hurdle at $3.14.
On the other hand, if the price breaks below $2.60, it will suggest that the bullish momentum could be weakening. The pair could then drop to the psychological level at $2.
A break and close below this level will suggest that the pair could consolidate inside a large range between $1.17 and $3.14.
Fantom: buy or sell at current levels?
The Fantom price analysis suggests that bulls are attempting to resume the uptrend, but the negative divergence on the RSI warns that the up-move could face stiff resistance at higher levels. A break and close below $2.60 will suggest that the bullish momentum has weakened.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.