Compound begins the new month in style, breaking above $250.
Compound must rise above $260 to sustain the bullish case and avoid a potential double-top pattern breakdown.
Compound, one of the major decentralized finance (DeFi) tokens is a consistent upward roll following the key support embraced at $160. The support came in handy after the token spiraled from highs above $260 (a high formed on August 12). The decline was also consistent with various tentative support areas at $220 and $200 and $180 failing to rise to the occasion.
Compound is among the leading cryptocurrencies in the DeFi ecosystem. It is an Ethereum based token mainly used for lending. According to DeFi Pulse, an aggregator platform, COMP is currently the seventh-largest DeFi token. About $766 million of funds are currently locked in in Compound, trailing protocols like Yearn.finance and Synthetix. Aave continues to dominate the DeFi space with $1.52 billion in total locked value followed by Maker at $1.48 billion.
At the time of writing, COMP is hovering at $250. All eyes are locked on breaking past the next key hurdle at $260. With the Relative Strength Index (RSI) moving higher above 70, there is a high probability that the token would in the near term climb above $260. The same bullish scenario is supported by the Moving Average Convergence Divergence (MACD). Besides, extending the action higher within the positive region, a bullish divergence above the MACD signals that buyers have the upper hand.
COMP/USD 4-hour chart
On the downside, if the resistance at $260 is not broken, an early spotted double-top pattern could pull Compound downwards, retesting possible support areas at $220, and $200. Meanwhile, seeking support above $250 or even $240 should be key among the bulls as it would give them an opportunity to stage a formidable attack on $260 and $280 respectively.
Luke has had a long interest in financial technology, especially cryptocurrency and blockchain. With a Bachelors degree in Journalism and Media, Luke is dedicating his writing skills for the digital currency sphere.He can be contacted at firstname.lastname@example.org