The ICP price rose by over 56% in the first five days of the new year, reaching a 30-day high of $38 on Jan. 5. Its massive upside move accompanied a spike in trading volumes, underscoring a strong and healthy bullish sentiment for now.
At the center of ICP’s recent price rally was a flurry of optimistic news.
That includes Binance’s decision this Tuesday to list a financial instrument that would enable traders to directly swap ICP to/from Ethereum’s native token Ether (ETH) and the launch of Terabethia, a cross-blockchain bridge, on Dec. 22 that enables Ethereum’s ERC-20 tokens to exist natively on the Internet Computer blockchain.
Additionally, a rally across the smart contract platform tokens, especially in the last seven days, may have boosted traders’ appetite for ICP.
Nevertheless, ICP remains at risk of paring its recent gains entirely as it trended lower inside its multi-month descending channel range.
In detail, the Internet Computer token price reached the channel’s upper trendline on Wednesday, thus exposing itself to selloff risks. That is primarily due to the trendline’s history of limiting ICP’s upside attempts, as shown in the chart below.
Meanwhile, recent data also shows that a pullback from the upper trendline pushed the ICP price towards the channel’s lower trendline. For that reason, ICP risked falling to new price lows despite its bullish rebound.
More cues for ICP’s pullback setup came from an another resistance near $37.70 and overvaluation risks posed by the token’s daily relative strength index (RSI).
The $37.70-level, which helped ICP limit its bearish exposure between September and November 2021, coincides with the 0.236 Fib line of the Fibonacci retracement graph drawn from the circa $89-swing high to the $22-swing low.
Meanwhile, the RSI reading at press time came out to be near 67.50. A value above 70 will make ICP an overbought asset that may amount to a certain degree of price correction/consolidation. Should it happen, the ICP price could risk falling to the 0 Fib line near $22.
Related: Dfinity insiders alleged to have illegally sold ICP and harmed retail investors
Conversely, closing above the $37.70-level could have Internet Computer eye $47.50 as its next upside target.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.