Internet Computer (ICP) price changed direction after dropping to its lowest level near $14.50 on Feb. 24 and has risen more than 30% since then. And now it looks like the 35th largest digital asset by market cap has more room to grow in the coming weeks.
ICP breaks out of ‘falling wedge’
ICP’s daily chart shows a falling wedge pattern – a setup made up of two falling, converging trendlines connecting lower highs and lower lows. The intersecting nature of the two lines indicates declining bearish momentum. As such, traditional analysts expect a wedge breakout to be bullish.
For ICP/USD, the wedge hurdle was close to $17.75, as shown in the chart below. It broke above it on March 22 and continued to climb into the next daily session accompanied by an increase in trading volumes. Overall, it shows a convincing breakout of a falling wedge in action.
ICP/USD daily price chart with a falling wedge setup. Source: TradingView
In a “perfect” scenario, breaking a falling wedge pattern – upward – can see a subsequent price increase by as much as the maximum distance between the wedge’s upper and lower trendline. That could put ICP on its way to more than $27 sometime in April — down nearly 50%.
Nevertheless, there is also a possibility that ICP’s breakout mode will exhaust itself midway through the USD 20, a level that coincides with the resistance trendline of its multi-monthly bearish channel. Still, the internet computer’s token would have a potential 20% upside setup before the next pullback occurs.
Bearish Risks Continue to ICP Price
Falling wedges perform poorly when it comes to predicting bullish chart patterns, according to Tom Bulkowski, a veteran stock market investor, who noted that they work well at predicting a “downward breakout in a bear market.”
ICP has been in a bear market since its May 2021 launch on crypto exchanges, with the price falling more than 90% from its debut rate of around $240 (data from Binance). The token fell after allegations that the founding company, DFINITY, had dumped billions of dollars worth of internet computing tokens while also preventing early investors from leaving their positions.
In addition, a correction over Bitcoin (BTC) and the rest of the cryptocurrency markets also weighed on the ICP’s bullish outlook.
Notably, the correlation between Bitcoin and internet computing has been mostly positive since the ICP’s trading debut on exchanges. In other words, ICP typically sees downward movements when BTC experiences a correction.
ICP/USD daily price chart. Source: TradingView
Despite logging a breakout of a falling wedge, ICP still sees further bullish confirmation as it trades below its 50-day exponential moving average (50-day EMA; the red wave) close to $19, a strong resistance level since September 2021.
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If ICP does not mark a break above the 50-day EMA, ICP may be testing its record low near $14 again, down more than 20% from today’s price.
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