Will Compound (COMP) experience a sharp correction despite a 23% increase?

Compound (COMP) has recently recorded an impressive 23% increase on the price chart. However, this altcoin has signaled a bearish trend, indicating a potential reversal in the near future. This has led to a correction, with COMP trading at $20.51 at the time of writing, after reaching a daily high of $22.84.

Investor interest in COMP remains strong, with trading volume surging by 502%, reaching an astonishing $307.95 million. This spike, along with the previous upward momentum, suggests that investors and traders are actively participating in the COMP market.

Nevertheless, a major question remains: Will COMP continue its upward trend, or will it enter a correction phase?

Price Action Analysis and Key Technical Levels of COMP

According to technical analysis from Coinphoton on the daily chart, COMP is currently in a prolonged downtrend. Since August 2025, the price of this altcoin has been moving within a classic descending channel pattern.

Notably, historical data shows that whenever COMP’s price touches the upper boundary of the descending channel, it quickly reverses and experiences a strong correction.

Source: TradingView Based on past behavior, if COMP continues to fail to break above this long-term downtrend line, history may repeat itself. In that case, COMP’s price could drop more than 30%, potentially falling below $15.

Conversely, if COMP manages to break out of this bearish pattern and closes the daily candle above $24.85, the bearish scenario would lose validity.

Additionally, the Average Directional Index (ADX) indicator, which measures trend strength, has risen to 48.83, well above the critical threshold of 25. This indicates a strong trend in the market.

However, the Money Flow Index (MFI) has reached 72.27, reflecting increasing buying pressure but also signaling overbought conditions. This combination often suggests a short-term correction or a consolidation phase.

Diverging Signals from Traders

Although COMP has experienced significant price gains, data from the derivatives analysis platform Coinglass and on-chain analysis tool Nansen show conflicting signals from investors and traders.

According to the inflow/outflow data on the spot market from Coinglass, over $144,880 worth of COMP has been withdrawn from exchanges in the past 24 hours, indicating accumulation by investors.

Source: Coinglass At the same time, Nansen recorded a 4.12% decrease in COMP reserves on exchanges during the same period, further supporting the accumulation trend.

Source: Nansen However, short-term traders are more cautious, closely monitoring price movements. Data from COMP’s liquidation map shows traders have concentrated positions around $19.6 on the downside and $22.1 on the upside—two key support and resistance levels.

At these levels, traders have built a total of $343,130 in long positions and $2.06 million in short positions. This indicates that most traders believe COMP will struggle to break above the $22.1 resistance in the short term.

Conclusion

COMP stands at a crossroads, with technical signals suggesting a continued downtrend if it fails to break the long-term descending trendline. Meanwhile, increased trading volume and accumulation behavior from investors are notable factors, but they do not guarantee that COMP’s price will continue rising. Currently, traders are heavily betting that the price will not surpass the $22.1 resistance, which could lead to short-term correction pressure for COMP.