Internet Computer: Correction risk rises after ICP price gains nearly 60% in 5 days
Internet Computer (ICP) has entered 2022 with a bang.
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
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