Compound (COMPUSD) Bearish Trend Persists Despite Temporary Bullish Retracement

Price Analysis: Compound Remains in a Bearish Trend Despite a Potential Short-Term Bullish Retracement

Compound market has been in a sustained downtrend following a decisive lower high formation in early December 2024. Before this shift in market sentiment, price action exhibited a series of higher highs reinforcing a bullish structure. However, as the market peaked in December 2024, a reversal took place, marking the beginning of a bearish phase.

COMPUSD Key Levels

Demand Levels: $51.10, $40.10
Supply Levels: $65.70, $82.00

After the formation of the lower high, COMP/USD established a clear downtrend, characterized by successive lower lows. This bearish momentum was further confirmed by a significant Bearish Break of Structure (BoS), which saw the price plummet towards the $51.10 demand level. Upon reaching this level, the market experienced a brief pause, suggesting a potential short-term reversal or consolidation phase.

On the 4-hour timeframe, this pause in bearish momentum appears as a failed low, hinting at a possible bullish correction. Further supporting this notion, the daily Relative Strength Index (RSI) indicates that the asset is in an oversold region, increasing the likelihood of a short-term bullish reaction. This technical signal suggests that buyers may attempt to regain temporary control, leading to a potential retracement.

However, the broader market structure remains decisively bearish. The daily Moving Average (MA) continues to signal downward momentum, with price trading below this key indicator. Additionally, the Bearish Break of Structure serves as a strong confirmation that the prevailing trend remains downward. These factors indicate that while a bullish retracement may occur, it is likely to be temporary and should be viewed as a pullback rather than a trend reversal.

Market Expectation

Given the confluence of technical signals, traders should approach the anticipated bullish movement with caution, recognizing it as a retracement rather than a trend reversal. As long as the price remains below key resistance levels and continues to respect the bearish structure, the dominant downtrend is expected to persist. Any bullish price action should be monitored closely for potential sell opportunities at key resistance zones, aligning with the broader bearish outlook.

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