The pullback in US equity markets last week extended the market-wide losing streak to three straight weeks. The Nasdaq Composite has fallen for six straight days for the first time since 2019. The markets’ negative reaction to the seemingly positive August jobs report suggests that traders are worried about the future actions of the Federal Reserve and its effects on the economy .
Weakness in US equity markets took bitcoin (BTC) back below $20,000 on September 2 and bears supported the price below that level over the weekend. That pulled bitcoin’s market dominance to just under 39% on September 4, the lowest level since June 2018, according to data from CoinMarketCap.
Although the sentiment is still negative and it is already difficult to talk about below, investors who believe in the long-term prospects of cryptocurrencies could take the opportunity to gradually build positions at lower levels instead of higher trying to do get to the bottom. Other investors, however, may avoid chasing higher prices during bear market rallies and look to buy when price breaks strong support levels.
If bitcoin recovers, some altcoins could rise. Let’s study the charts of the top five cryptocurrencies that look strong on the charts.
Bitcoin has been trading in a tight range between $19,520 and $20,576 for the past few days, indicating a balance between short-term buyers and sellers. Although the bulls are buying on the downside, they have not been able to overcome the sell-off at higher levels.
The 20-day sloping exponential moving average ($20,863) and the relative strength index (RSI) in negative territory indicate an advantage for sellers. If the bears push the price below $19,520, the BTC/USDT pair could fall towards the strong support zone between $18,910 and $18,626.
This area is likely to attract strong buying from the bulls, as has happened twice before. The bears will need to drive the price down below $17.622 to signal that the trend is down again.
On the other hand, buyers will need to push the price and hold it above the 20-day EMA to signal that the bears may lose their grip. The pair could reach the 50-day simple moving average ($22,271).
The price came down from the strong support near $19,520, but the bears are trying to block the recovery at the moving averages. This shows that the bears are selling on every mini-rally. If the bears drive the price below $19,520, the pair could resume the next phase of the downtrend.
Contrary to this assumption, if the bulls push the price above the moving averages, the pair could try to rally towards the resistance of the range at $20,576. Buyers need to clear this hurdle to signal a possible near-term trend change.
Cardano (ADA) is consolidating but trying to break above the moving averages. This indicates demand at lower levels and increases the chance of a bullish move, which is the reason for the selection.
The 20-day EMA ($0.47) has flattened and the RSI has moved into positive territory, indicating that selling pressure is easing. If the price is held by the buyers above the 50-day SMA ($0.50), the pair ADA/USDT could rally to the downtrend line.
This level could act as a strong resistance again, but if the buyers break this barrier, the pair could reach $0.70.
This positive outlook could be negated in the short term if the price turns down from the current level and falls below the 20 day EMA. If that happens, the pair could slide again towards the strong $0.40 support.
The 20-EMA on the 4-hour chart is tilting higher and the RSI has moved into overbought territory. This shows that the bulls are in control, but a minor correction or consolidation is possible in the short term.
If the price is above $0.48 or the 20-EMA by the buyers, it will suggest a change of sentiment from selling on the rallies to buying soon. This could push the price to $0.54 and later to the downtrend line.
To invalidate this positive view, you will need to pull the price back below $0.48. If that happens, the pair could slide to $0.44 and then to $0.42.
Cosmos (ATOM) has not lost ground in the past few days and is trading near its broad resistance at $13.45. This shows that traders are not closing their positions because they expect the price to rise. This is the reason it is included in this list.
The ATOM/USDT pair fell below the 50-day SMA ($11.08) on August 29, but the bulls bought at lower levels. This triggered a bounce that reached the upper resistance at $13.45. The moving averages gradually increase and the RSI in positive territory indicates that the path of least resistance is to the upside.
If the buyers push the price above $13.45, the pair could regain momentum and hit $15.30 and then $20. This positive view could be invalidated if the price turns sharply lower and falls below the psychological support at $10.
The 20-EMA is trending higher and bulls are buying dips towards this support. This gives a positive short-term impression. The bulls will try to push the price towards the broad resistance at $13.45. This is an important level to watch as a break and close above this level could indicate a re-upside.
On the other hand, if the price turns down from the current level or the general resistance and breaks below the 20-EMA, it will suggest that the bears are active at higher levels. The pair could then stay in a range between $10 and $13.45 for a while.
Also read: Why Merge Won’t Save Ethereum Price Since September?
Filecoin (FIL) traded in a tight range between August 27th and September 2nd, settling higher on September 3rd. This piece was chosen in the hope that buyers would be able to continue shopping.
The FIL/USDT pair rallied strongly and broke above the 20-day EMA ($6.39) on September 3, which is the first indication that buyers are trying to come back. However, the bears will not be up easily and are a significant challenge near the 50-day SMA ($6.92).
The bears pulled the price back below the 20-day EMA on September 4. If they keep the price below this level, the pair could go down to $5.50. Conversely, if the price rises from the current level and breaks above the 50-day EMA, this will suggest strong buying on the downside. The pair could then rally to $9 and then to $9.50.
The pair rebounded from the upper resistance zone between $6.80 and $6.60, but it is a small bright spot that the bulls did not let the price slip below the 20-EMA. If the price recovers from the current level, the possibility of a breakout and a close above the zone will increase.
If this happens, the pair will complete an inverse head and shoulders pattern. The pair could then gain momentum and head towards the $7.6 target and later towards $8.30.
This positive outlook may be invalidated in the short term if the price breaks and closes below the 20-EMA. The pair could then fall towards the strong support of $5.50.
EOS made the list because even in the chaos, it managed to stay above the moving averages. This indicates short-term outperformance and increases the likelihood of a rally if sentiment improves in the cryptocurrency sector.
The EOS/USDT pair made a rallying bottom pattern on August 21, but the bulls were unable to hold the higher levels. The bears pulled the price back below the breakout level on August 28, indicating strong selling on the rallies.
A small bright spot is that the dip to the 50-day SMA ($1.33) was strongly bought by the buyers. The 20-day EMA ($1.48) is flat and the RSI is near the midpoint, indicating a balance between buyers and sellers.
This balance could favor the bulls if they push and hold the price above $1.60. The pair could reach the upper resistance near $2. Alternatively, a breakout and close below the 50-day SMA could open the doors for a potential decline towards $1.15.
The bears sold the bounce near $1.60 and are looking to drive the price back below the breakout level of $1.46. If they succeed, the pair could fall to the uptrend line. This level has acted as strong support three times, so the bulls will try to defend it again.
If the price bounces off the uptrend and breaks above $1.60, the pair could regain momentum and hit $1.80 and then $2. Conversely, a breakout and close below the uptrend will indicate that the short-term advantage may be over. The pair could then fall to $1.24.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph. All investment and trading involves risk. You should do your own research before making a decision.