Compound (COMP) at descending-channel resistance — 23% rally may fuel a 30% pullback
COMP surged about 23% intraday to a high of $22.84 before pulling back to $20.51 as trading volume jumped 502% to $307.95M. Technicals show COMP has traded inside a descending channel since August 2025; historically, touches of the channel’s upper boundary have led to strong reversals. If COMP fails to break and close daily above $24.85, a downside move of over 30% (potentially below $15) is plausible. Trend strength (ADX) is elevated at 48.83 while the Money Flow Index (MFI) sits at 72.27, indicating strong buying but overbought conditions that could precede a short-term pullback. On-chain and derivatives signals are mixed: Coinglass reports $144.88k COMP flowed out of exchanges in 24h (suggesting accumulation) and Nansen shows a 4.12% drop in exchange reserves. Liquidation maps show concentrated shorts (~$2.06M) near $22.1 and longs (~$343.13k) near $19.6, implying traders expect resistance around $22.1. Key trading implications: short-term risk off if COMP is rejected at the channel top — traders may prefer short or hedge positions around $22–$25, while accumulation by longer-term holders could support a slower recovery if COMP breaks and closes above $24.85.
Bearish
Price action and indicators point to elevated short-term downside risk. COMP’s move occurred at the upper boundary of a long-running descending channel that historically triggers reversals; failure to close a daily candle above $24.85 would preserve the bearish pattern and could lead to a >30% correction toward sub-$15 levels. Supporting bearish case: MFI shows overbought conditions and ADX indicates a strong directional move (often followed by consolidation/reversal), and liquidation maps reveal sizable short exposure around $22.1 which could cap upside. Offsetting factors: exchange outflows and falling reserves (Coinglass, Nansen) imply accumulation by longer-term holders, which may limit declines or support a rebound if a breakout occurs. For traders: expect elevated volatility. Short-term traders should watch the $22.1 resistance and $19.6 support; consider short or hedge positions if rejection occurs at the channel top, and reassess bullish bias only after a confirmed daily close above $24.85. Historically, assets in prolonged descending channels often suffer significant retracements when rejected at channel resistance, while accumulation on-chain can moderate losses but rarely prevents an immediate pullback in the absence of a breakout.