Market Overview for Compound/Tether (COMPUSDT): Volatility Peaks, Correction Sets In

• Price surged from $41.24 to $43.90 before correcting to $41.60 in the final hour.
• Strong volume and momentum in the morning hours indicate aggressive buying.
• A bullish engulfing pattern formed at the peak, followed by a bearish reversal.
• RSI overbought and Bollinger Band expansion suggest high volatility.
• Total volume and turnover spiked near the 24-hour high, then declined.

Opening Narrative

Compound/Tether (COMPUSDT) opened at $41.24 at 12:00 ET − 1 and reached an intra-day high of $43.90 before closing at $41.60 at 12:00 ET today. The total volume traded over 24 hours was 18,308.50 COMP, while turnover amounted to approximately $773,686. This marks a volatile 24-hour period with strong early momentum followed by a sharp correction.

Structure & Formations

Price action showed a key breakout above the $42.00 psychological level early in the session, followed by a bullish engulfing pattern at $43.06–$43.24. However, a bearish reversal was confirmed by the final candle closing near the session low, forming a large bearish body at $43.55–$41.60. Key support levels include $41.60, $41.35, and $41.06, with $42.10 as a critical resistance. A doji formed around $42.55, suggesting indecision after the initial rally.

Moving Averages

On the 15-minute chart, price briefly broke above the 20-period MA before retreating, with the 50-period MA acting as a temporary floor. On the daily chart, price ended above both the 50- and 100-period MAs, suggesting intermediate bullish bias, though the 200-day MA remains bearish. This suggests a potential retest of the 50-day MA in the coming days.

MACD & RSI

The MACD crossed above zero early in the morning, confirming the bullish momentum, but the line fell below the signal line as the correction set in. RSI peaked above 70, reaching overbought territory before dipping below 50 as the sell-off accelerated. This divergence indicates a weakening in momentum and a potential continuation of the downward move.

Bollinger Bands

Volatility expanded significantly during the morning breakout, with price surging above the upper band by 6% before a sharp reversion to the lower band. The closing candle touched the lower band, suggesting a temporary oversold condition. A contraction in band width is expected as the market stabilizes, potentially signaling a short-term reversal.

Volume & Turnover

Volume spiked dramatically during the morning surge, with the 15-minute candle at 03:45–04:00 ET showing a 1,184.452 COMP volume. Turnover confirmed the strength of the breakout but diverged sharply with price as the correction began. By the final hour, volume had declined, indicating reduced conviction from buyers.

Fibonacci Retracements

A key retracement level at 61.8% (around $42.45) acted as a short-term resistance during the morning session, before being broken decisively. On the daily chart, the 50% retracement from the recent swing high to low is now at $41.60, coinciding with the current close. A break below $41.06 could trigger further retracements to 78.6% at $40.62.

Backtest Hypothesis

The morning breakout and bearish reversal at the session high align with a potential backtesting strategy that combines RSI overbought conditions and a bullish to bearish candlestick transition. A strategy could be constructed to short on the closure of a bearish reversal candle following a 61.8% Fibonacci retracement and a RSI above 70. This would be accompanied by a trailing stop below the 50-period MA. The high volume and divergence in turnover would serve as confirmation of the short signal, while the doji and Bollinger Band contraction would act as risk management triggers.