Major US stock indices continued their decline last week as worsening macroeconomic conditions heightened concerns of a global recession. The Dow Jones Industrial Average closed at its lowest level in 2022 and the major indexes posted their fifth red weekly close in the past six weeks.
Although Bitcoin (BTC) is only down marginally this week, it is at risk of closing at the lowest level since 2020. While a new weekly close at a low is a negative sign, sellers will have to hold the lower levels or, otherwise, it could become a bear trap. The price action of the coming days is likely to witness more volatility as both the bulls and the shorts battle it out for supremacy.
Many investors miss the opportunity to buy during sharp corrections because they try to catch the bottom. Investors should rather focus on the projects they like and accumulate the coins in a staggered manner over a few weeks or months. Not all coins bottom out at the same time, so it is best to focus on individual cryptocurrencies that are showing strength.
While Bitcoin is nearing its yearly lows, some altcoins are holding up relatively well. Let’s look at the charts of five cryptocurrencies that look interesting in the short term.
Bitcoin bulls have successfully defended the $18,626-$17,622 support zone in recent days, but continue to face strong selling at the 20-day exponential moving average ($19,720). This suggests that the bears continue to sell on the small rallies.
The falling moving averages indicate that the bears have the upper hand, but the positive divergence in the RSI suggests that the bearish momentum might be weakening.
A breakout and close above the 20 day EMA will be the first sign that the bears may be losing their grip. The BTC/USDT pair could then rally to the 50-day SMA ($21,043) and subsequently to $22,799. The buyers will have to overcome this barrier to lay the foundation for a rally to $25,211.
Conversely, if the bears sink the price below the June low of $17.622, the selling could intensify and the pair could resume its downtrend. The pair could then crash to $14,500.
The bears are buying the dip below $18.626, but the bears continue to stall the rally at the 50 SMA zone. This has pushed the price between these two levels, but this tight trading range is unlikely to continue for a long time.
If the price turns down and sustains below $18.626, the bears could push the pair to the vital support of $17.622. This level may once again witness a strong battle between the bulls and the shorts. To the upside, if the buyers push the price above the 50-day SMA, the pair could rally to $20,400.
Cosmos (ATOM) has been trading above the breakout level of $13.46 for the past few days, indicating that the sentiment remains positive and traders are buying the dips.
The 20-day EMA ($14.22) has flattened out and the RSI is close to the midpoint, which indicates a balance between supply and demand. If the price breaks above $15.26, the short-term advantage could tip in favor of the buyers. The ATOM/USDT pair could then rally to $17.20.
This level can act as resistance again, but if the buyers push the price above it, the pair could pick up momentum and rally to $20.34 and then $25.
Contrary to this assumption, if the price turns down and breaks below the 50-day SMA ($12.90), the advantage could tip in favor of the bears. The pair could then drop to $10.
The pair has been stuck between $13.45 and $17 for some time. The buyers aggressively defended the $13.45 support and are trying to push the price above the 50-day SMA. If they do, the probability of a rally to $16 and subsequently to $17 increases.
Conversely, if the price turns down from the current level and breaks below the 20 EMA, it will suggest that the bears are still selling on the rallies. This could take the price to the strong support at $13.45. Sellers will have to sink the pair below $13 to clear the way for a potential drop to $11.50.
The range action uncertainty between $0.27 and $0.38 resolved to the upside on September 23, signaling the start of a new move higher. If that happens, Algorand (ALGO) could continue in its first leg of the uptrend.
The important level to watch on the downside is $0.38. If the bulls turn this level into support, it could increase the probability of a new uptrend starting. The ALGO/USDT pair could then rally to $0.45 and subsequently to $0.50.
This bullish view could be invalidated in the short term if the price breaks below $0.38 and re-enters the range. That could sink the price to the 20-day EMA ($0.33). If the price bounces off this level, the bulls will once again try to break above the overhead resistance.
The price rallied above the overhead resistance of $0.38, but the bulls were unable to build on this momentum. This shows that the sellers have not given up yet and are still making mischief on the rallies near $0.41.
If the bears pull the price below the 20 EMA, the pair could drop to $0.36. This is an important level for bulls to defend as a break below it could open the doors to a possible drop to the 50-day SMA.
On the upside, the bulls will have to push the price above $0.41 to signal the resumption of the up move.
Chiliz (CHZ) rallied strongly from its June lows and the bulls broke above the overhead resistance of $0.26 on Sep. 22, signaling a resumption of the up move. When a currency moves against market sentiment, it deserves attention.
The bears have attempted to sink the price below the breakout level of $0.26 for the past three days, but the bulls have held their ground. This shows that the bulls are viewing dips as a buying opportunity. The rising moving averages and the RSI in positive territory indicate that the buyers are in command.
If the price turns up and breaks above $0.28, the CHZ/USDT pair could rally to the next hard resistance at $0.33.
Conversely, if the price turns down and breaks below $0.26, it will suggest that traders rush out. The pair could first drop to the 20-day EMA ($0.23) and subsequently to the 50-day SMA ($0.21).
Both moving averages are sloping up indicating advantage for the buyers, but the negative divergence on the RSI shows that the bullish momentum may be weakening. If the bears sink the price below $0.26, the pair could drop to the 50 SMA. This is a key level for the bulls to defend as if it breaks, the pair could drop to $0.22.
On the other hand, if the price rebounds from $0.26 and breaks above the $0.28 mark, the up move could resume. The pair could go as high as $0.32.
Quant (QNT) is showing strength as it is trading above both moving averages. Even when the sentiment in the crypto sector has been negative, it has managed to rise.
The bears have been defending the $112 level for the past few days, but the bulls broke through the resistance on Sep 24 and pushed the price to the downtrend line. The long wick of the day candle shows that the bears are trying to stop the move higher at this level.
On a positive note, the bulls bought the dip to $112 on Sept. 25, which suggests that the buyers are trying to turn this level into support. The QNT/USDT pair could rally back to the downtrend line. If this hurdle is overcome, the pair could rally to $133 and subsequently to $154.
On the other hand, if the price turns down and breaks below $112, the next stop could be the 20-day EMA ($106). A break below this support could take the pair to $95.
The pair gained momentum after breaking above $112 and approaching the downtrend line. This pushed the RSI into the overbought zone, which may have tempted short-term traders to take profits.
The price bounced off $112, indicating that the sentiment remains positive and traders are buying dips. The pair could rally to $121 and then to the downtrend line. Conversely, if it breaks below $112, the pair could drop to the 50-day SMA zone and subsequently to $95.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.