Bitcoin could attempt a relief rally which could trigger a rebound in the price of MANA, MKR, ZEC and KCS.
Bitcoin (BTC) has been relatively quiet over the weekend as crypto traders try to rebuild the markets after the LUNA de Terra debacle. With macro factors not supportive, several analysts expect the recovery to be a slow march.
Cryptocurrency research firm Delphi Digital said in a recent report that the rally in the US dollar index (DXY) had pushed its 14-month relative strength index “above 70 for the first time since its late 2014-2016 bull run”.
Historically, 11 of 14 such cases had caused the DXY to rise by around 5.7% in the following 12 months. If the inverse correlation between DXY and Bitcoin remains intact, that could spell trouble for crypto investors.
Arthur Hayes, Former CEO of crypto derivatives platform BitMEX, said in his latest blog post that crypto markets need to be “healed” after the bloodbath. He said that if bitcoin falls to $20,000 and Ether (ETH) to $1,300, he would become a buyer.
Although cryptocurrency markets are in a downtrend, periodic bear market rallies could offer short-term trading opportunities. Let’s study the charts of the top 5 cryptocurrencies that could bounce if sentiment improves.
Bitcoin attempted a strong bounce on May 13, but the long wick of the day’s candle suggests that the bears are in no mood to let go of their advantage. Nevertheless, A small silver lining is that the bears have not been able to sustain the price below the crucial support at $28.805.
The recovery could hit a snag at the 38.2% Fibonacci retracement level at $31,721 and again at the 20-day EMA ($33,985).
If the price turns below either of the two resistances, the bears will get their chances and try to sink the BTC/USDT pair below $26,700. If they succeed, the downtrend could resume. The next support on the downside is $25,000 and then $21,800.
If the buyers break above the 61.8% Fibonacci level at $34,823, the selling pressure will weaken.. This could lead to a strong rally towards the 50-day SMA ($39.626), where the bears are expected to pose a strong challenge again.
The bulls are buying the dips to the critical support of $28.805, while the bears are trying to stall the rally at the downtrend line. The 20-EMA has flattened out and the RSI has risen to the midpoint, indicating a balance between supply and demand.
If the buyers push the price above the downtrend line, it will indicate an advantage for the buyers. The bulls could then push the price up to $32.659. If it breaks down and closes above this level, it will clear the way for a possible rally towards the 200-SMA.
Conversely, If the bears pull the price below $28,805, the pair could drop to $27,700. The bulls are likely to defend this support aggressively as a break below it could signal a resumption of the downtrend.
Decentraland (MANA) has been in a strong downtrend for the past few days. The bulls aggressively defended the decline to $0.60 on May 12, which led to a rally to the 20-day EMA ($1.36).
In a downtrend, the bears sell rallies to the 20-day EMA. If the price turns down sharply from the current level, the bears will try to retest the $0.60 support. A breakout and close below this level could signal a resumption of the downtrend. The MANA/USDT pair could then extend its decline to the psychological $0.50 level.
Conversely, if the bulls do not give up much ground from the current level, this will suggest that traders are buying dips. That could increase the prospects for a break above the 20 day EMA. If this happens, the pair could rally to the 50-day EMA ($1.94).
The strong bounce from the $0.60 level has broken out of the 50-day SMA. Although the bears tried to pull the pair down, the bulls bought the dips to the 20-day EMA. This suggests that the bulls are attempting a comeback. Now the buyers will try to push the price towards the 200-day SMA, which is likely to act as a strong resistance.
Conversely, if the price turns down from the current level and breaks below the 20 EMA, it will suggest that the bears are active at higher levels. This could take the price to $0.95. If this level breaks, the pair could retest the crucial support at $0.60.
Maker (MKR) bounced off the psychological support at $1,000 on May 12, which indicates that the bulls are defending this level with all their might.. The bulls pushed the price to the 50-day SMA ($1,754) on May 13, but the long wick of the daily candlestick shows strong selling at higher levels.
However, a positive sign is that the bulls did not give up ground on May 13 and resumed the relief rally. The 20-day EMA ($1,440) has started to turn up and the RSI is just above the midpoint, which suggests a small upside for the buyers.
The bulls will try to push the price above the 50-day SMA. If they are successful, it will clear the way for a possible rally to the 200-day SMA ($2,179).
Alternatively, if the price turns down from the current level or the 50-day SMA, it will suggest a strong sell at higher levels. The bullish momentum could weaken if the bears pull back and hold the price below the 20-day EMA.
The 200-day SMA has repeatedly been acting as a strong resistance, but a positive sign is that the bulls are buying the dips to the 20-day EMA. This suggests a shift in sentiment from selling on the upside to buying on the downside.
If the buyers sustain the price above the 200-day SMA, the MKR/USDT pair could pick up momentum and rally to $1,800 and then $1,900. Conversely, if the price turns down from the current level and breaks below the 20-day EMA, the pair could drop to the 50-day EMA.
Zcash (ZEC) has successfully held the strong support of $81 for the past few days. Although the bears pulled the price below this support on May 11 and 12, they were unable to sustain the lower levels. This indicates strong demand from the bulls.
The ZEC/USDT pair could now rally to the 20-day EMA ($114). This level acted as a strong hurdle during the previous pullback on May 5. Therefore, the bears will try to stall the rally at the 20-day EMA.
If they manage to do that, the price could drop back towards the crucial support at $81. The bears will have to sustain the price below this level to start the next leg of the downtrend.
Alternatively, if the bulls push the price above the 20-day EMA, the pair could rally to $135, where the bears can mount a strong defense. The bulls will have to push the price above the 200-day SMA ($150) to signal a possible trend reversal.
The bulls have pushed the price above the 50 SMA on the 4-hour chart. This suggests that demand remains intact at higher levels. The 20-day EMA has started to turn up and the RSI is in the positive zone, which indicates that the sellers may be losing control.
The buyers could face resistance at the $108-$116 zone but if they break through this barrier, the recovery could reach $135.
On the downside, the first sign of weakness will be a breakout and close below $87. That could open the doors for a retest of the crucial support zone between $81 and $69. A breakout and close below $69 could signal a resumption of the downtrend.
KuCoin Token (KCS) rebounded sharply from strong support at $9 on May 12. The relief rally has cleared the first hurdle at the 38.2% Fibonacci retracement level at $12.89, which is a slight positive.
The KCS/USDT pair could next rally to the 50% retracement level at $14.95 and then rally to the critical overhead resistance at the 20-day EMA ($15.45). This is an important level to watch because a break above it could indicate that the downtrend may be over.
Contrary to this assumption, If the price drops sharply from the current level, the bears will once again try to sink the pair below the crucial support at $9. If this level breaks, the pair could resume its downtrend and drop to $5 and then $4.40.
The bulls have pushed the price back to the 50 SMA, indicating a strong comeback attempt. The 20-day EMA has started to rise gradually and the RSI has jumped into the positive territory, which suggests that the path of least resistance is to the upside.
If the bulls push the price above the 50 SMA, the pair could rally to $15. Upside momentum could increase further if the buyers break through this barrier.. This positive view could be invalidated in the short term if the price turns down from the 50-day SMA and breaks below $12. Then the bears will try to sink the pair to the strong support at $9.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should do your own research when making a decision.