Fantom (FTM) looks poised to striking a new record high in the coming sessions afterward its 125% price rebound from $1.23 on Dec. xiv, 2022, to $2.84 on Jan. three, 2022, triggered a archetype bullish reversal setup.

Dubbed inverse head and shoulders (IH&S), the setup appears when an nugget forms three troughs below a then-called neckline resistance, with the middle trough (the caput) deeper than the left and right shoulder.

The toll of FTM has recently undergone a similar price trajectory, as shown in the nautical chart beneath. As a event, FTM has a common resistance in the range defined by $2.55 to $2.74, which encompasses the length of the inverse head and shoulders pattern.

FTM/USD daily toll chart featuring changed head and shoulders design. Source: TradingView

Could Fantom rally by another 50%?

In a perfect world, an IH&S design would normally result in a bullish breakout once the price closes decisively above the neckline level. Ideally, the upside target would be equal to the maximum distance between the head and the neckline, when measured from the breakout point.

On Monday, FTM almost completed its IH&S germination by reaching its neckline. As a result, the Fantom token'southward adjacent move could be a bullish breakout above the $2.55 to $2.74 resistance range. In doing so, it would pursue a run-up toward $4.33, based on the setup presented in the chart below.

FTM/USD daily price chart featuring the IH&S's breakout setup. Source: TradingView

A sharp price pullback from the neckline range, accompanied by a spike in volume, would run a risk invalidating the IH&Southward setup. In that case, the next ideal support line may come near $2.08. This would exist based on FTM's volume profile visible range (VPVR), a metric that displays trading activity over a specified period at specified toll levels.

FTM/USD daily price chart featuring volume contour target. Source: TradingView

Are there risks of overvaluation?

Downside risks in the Fantom market place also appeared in the form of its relative strength index (RSI), a metric that measures the magnitude of the asset's contempo price changes to evaluate its overbought or oversold conditions.

Relative Strength Index in a nutshell. Source: Investopedia

In detail, FTM's daily RSI entered an overbought territory on January. 3 equally its reading marginally jumped higher up lxx. The technical indicator suggests FTM is overbought and that it should undergo a certain degree of correction to neutralize its market place sentiment.

In layman's terms, an RSI reading to a higher place 70 is commonly seen every bit a signal to sell. Nonetheless, the sell-offs typically do non necessarily come right afterwards RSI jumps into the overbought zone.

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Based on multiple RSI corrections spotted betwixt August and September 2022, the FTM price appears to extend its upside momentum fifty-fifty after the indicator crosses above lxx. At its best, the daily RSI had reached almost 89 on Sep. 9, congruent with the FTM price hitting the and then-record high of $i.99.

FTM/USD daily price chart featuring RSI-led corrections. Source: TradingView

That somewhat leaves FTM with the possibility of pursuing its IH&S profit target of $4.33 despite its overvaluation risks. What could follow is a correction towards its twenty-24-hour interval exponential moving boilerplate (20-24-hour interval EMA; the green wave in the chart higher up) around $2.09.

This would bring the price near to the VPVR support at $ii.08, every bit discussed higher up.

The views and opinions expressed here are solely those of the author and do non necessarily reflect the views of Cointelegraph.com. Every investment and trading movement involves chance, you should carry your ain research when making a decision.