US equity markets plunged on August 26 after the Federal Reserve Chairman’s speech, Jerome Powell, in which he reiterated the central bank’s aggressive stance. Following its correlation with the stock market, Bitcoin (BTC) and the cryptocurrency markets also witnessed a strong sell-off on August 26.
Bitcoin is down nearly 14% this month, marking the worst performance for August since 2015, when the price had fallen 18.67%. This may be bad news for investors, as September has a dubious record of 6% average losses since 2013, according to data from CoinGlass.
Although buying in a downtrend market is not a good strategy, traders can keep a close eye on cryptocurrencies that are outperforming the markets because, in the event of a trend reversal, they are likely to be the first out. In a bear market, traders need to be patient because they are likely to find plenty of buying opportunities when the market stabilizes.
What are the critical levels to watch in Bitcoin? If a trend reversal occurs, what are the cryptocurrencies that may perform better in the short term? Let’s study 5 cryptocurrencies that look strong on the charts.
BTC/USDT
A weak bounce from strong support indicates that the bulls are hesitating to buy aggressively at the level.. The bulls successfully defended the support line for several days but were unable to push the price above the 20-day exponential moving average ($21.806). This shows the lack of demand at higher levels.
The bears seized the opportunity and pulled the price below the ascending channel on Aug 26. The 20-day EMA is sloping down and the RSI is close to the oversold zone, which indicates that the bears are firmly in the driver’s seat.
The BTC/USDT pair could drop to the strong support zone between $18,910 and $18,626. If the price bounces off this zone, the bulls will try to push the price above the 50-day SMA ($22,340). If they succeed, the pair could rally to $25.211.
On the contrary, If the price breaks below $18.626, the pair could retest the June 18 intraday low of $17.622. The bears will have to sink the price below this level to signal the resumption of the downtrend.
The falling moving averages on the 4-hour chart indicate that the bears are in command, but the positive divergence in the relative strength index (RSI) suggests that the selling pressure could be easing.
The first sign of strength will be a rally above the 20 EMA. If this happens, the pair could go up to the 50-day SMA. If this level is exceeded, the fix might be complete.
Conversely, if the price breaks below $19,800, the selling could pick up momentum and the pair could drop to the $18,910-$18,626 zone.
MATIC/USDT
Polygon (MATIC) has bounced off its strong support, which shows that the bulls are defending the level aggressively.. This increases the likelihood that the action in the range will continue for a few more days. This is one of the reasons to focus on this altcoin.
The bulls are trying to push the price above the moving averages. If they succeed, The MATIC/USDT pair might attempt a rally to the overhead resistance of $1.05. This level could attract strong selling from the bears.
On the other hand, if the price breaks away from the moving averages, it will suggest that the bears are selling on the rallies. The bears will then attempt to sink the price below the crucial support at $0.75. If they succeed, the pair could drop to $0.63.
The bulls have pushed the price above the moving averages, which is the first indication that the selling pressure may be easing. Another positive sign is that the RSI has made a positive divergence, a sign that the bears may be losing control.
The buyers will try to push the price above the resistance at $0.84. If they succeed, the pair could rally to $0.91, which could again act as a strong resistance. To invalidate this positive view, the bears will have to sink the price below $0.75.
ATOM/USDT
Cosmos (ATOM) has been selected because it is trading above the 50-day SMA ($10.58) and is close to the psychological support at $10.
The bulls are expected to defend the area between $10 and the 50 day EMA aggressively. If the price bounces off this zone and breaks above the 20-day EMA ($11.39), it will indicate that the selling pressure may be easing.
The ATOM/USDT pair could then rally to the overhead resistance of $12.50 and subsequently to $13.45. A break above this level could suggest that the downtrend may be over.
Conversely, if the price turns down and slides below the support zone, it could start a deeper correction. The pair could drop to $8.50.
On the 4-hour chart, the 20 EMA has turned down and the RSI is in the negative territory, which indicates that the bears have the upper hand in the short term. Sellers will have to sink and hold the price below the uptrend line to challenge the psychological support at $10.
Conversely, if the price bounces off the uptrend line, the bulls will be buying the dips to this level, as they have done on previous occasions. The buyers will have to push the price above the moving averages to open the doors for a possible rally to $12.50.
XMR/USDT
Monero (XMR) has made the list as it is holding above its immediate support at $142. This suggests that lower levels are attracting buyers.
If the bulls break out of the 20-day EMA ($153), the correction is over. The XMR/USDT pair could pick up momentum if the bulls break out of the overhead resistance of $158. If this happens, the pair could rally as high as $174. The bulls will have to overcome this hurdle to signal a resumption of the up move.
This positive view could be invalidated in the short term if the price turns down and breaks below the strong support at $142. If this happens, the pair could drop to $132 and later to $117. 20 days falling and the RSI in negative territory indicates that the bears have a slight advantage.
The buyers are trying to push the price above the 20-day EMA. If they get it, the pair could go up to the 50-day SMA, which could again act as a stiff resistance. If the bulls break out of this barrier, the pair could rally to $158. If it breaks out and closes above this resistance, it will suggest a change in short-term trend.
Conversely, if the price turns down from the 20-day EMA, it will suggest that the bears are selling the minor rallies. The pair could drop to the strong support at $142. If this support breaks, it will suggest the start of a deeper correction.
CHZ/USDT
Chiliz (CHZ) has found a place on this list for the third week in a row. This is because, even after the recent correction, it is still in an uptrend.
The buyers pushed the price above the overhead resistance of $0.26 on Aug 23 and 24, but failed to hold the higher levels as seen by the long candle wicks. This may have tempted short term traders to take profits. That pushed the price down to the breakout level of $0.20, which is just above the 20-day EMA ($0.20).
The bulls bought this dip and are attempting to resume the move up towards the overhead resistance of $0.26. The bulls will have to overcome this hurdle to open the doors for a possible rally to $0.33.
Upward moving averages suggest upside for buyers, but negative RSI divergence indicates upside momentum may be weakening. If the price turns down and breaks below the 20-day EMA, the advantage will go to the bears. In that case, the pair could drop to the 50-day EMA ($0.15).
The 20-day EMA on the 4-hour chart is flattening out and the RSI has been hovering close to the midpoint, indicating a balance between buyers and sellers.. This could keep the pair in a range between $0.20 and $0.26 for some time.
The next trending move could start if the bulls push and sustain the price above $0.26 or below $0.20. Until then, the bulls are likely to buy the dips towards the $0.20 support and sell near the $0.26 overhead resistance. Trading inside the range is likely to remain volatile and random.
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 conduct your own research when making a decision.