The fall in US stock markets last week extended the losing streak for the entire sector to three consecutive weeks. The Nasdaq Composite fell for six straight days for the first time since 2019. The markets’ negative reaction to an apparently positive August employment report suggests that traders are nervous about the Fed’s future moves and their effects on the economy.
Weakness in the US equity markets dragged Bitcoin (BTC) below $20,000 on Sept. 2 and the bears kept the price below the level over the weekend. This plunged Bitcoin’s market dominance to just under 39% on September 4, its lowest level since June 2018, according to data from CoinMarketCap.
Although sentiment remains negative and a bottom is difficult to determine, investors who believe in the long-term prospects of cryptocurrencies might take the opportunity to gradually build positions at lower levels rather than trying to predict the bottom. However, investors might avoid chasing prices higher during bear market rallies and try to buy when the price falls to strong support levels.
If Bitcoin recovers, some altcoins could go higher. Let’s study the charts of the top 5 cryptocurrencies that look strong on the charts.
BTC/USDT
Bitcoin has been trading in a tight range between $19,520 and $20,576 for the past few days, showing a balance between buyers and sellers in the short term. Although the bulls are buying on the dips, they have failed to break through the selling on the higher levels.
The falling 20-day exponential moving average ($20,863) and the RSI in negative territory indicate advantage for the sellers. If the bears sink the price below $19,520, the BTC/USDT pair could drop to the strong support zone between $18,910 and $18,626.
This area is likely to attract heavy buying by the bulls, as it has on two previous occasions. The bears will have to sink the price below $17.622 to signal a resumption of the downtrend.
On the other hand, the buyers will have to push and hold the price above the 20-day EMA to signal that the bears may be losing their grip. Then, the pair could go up to the 50-day SMA ($22.271).
The price bounced off the strong support near $19,520, but the bears are trying to stop the recovery at the moving averages. This shows that the bears are selling every minor rally. If the bears sink the price below $19,520, the pair could resume the next leg of the downtrend.
Contrary to this assumption, if the bulls push the price above the moving averages, the pair could attempt a rally to the range resistance at $20.576. Buyers will have to overcome this hurdle to signal a potential short-term trend reversal.
ADA/USDT
Cardano (ADA) is in a consolidation but is trying to break above the moving averages. This indicates that there is demand at lower levels and increases the chances of a move higher, which is the reason for its selection.
The 20-day EMA ($0.47) has flattened out and the RSI has entered the positive territory, which indicates that the selling pressure is easing. If the buyers sustain the price above the 50-day EMA ($0.50), the ADA/USDT pair could rally to the downtrend line.
This level could again act as a strong resistance, but if the bulls break through this barrier, the pair could rally to $0.70.
This positive view could be nullified in the short term if the price turns down from the current level and slides below the 20-day EMA. If that happens, the pair could slide back to the strong support at $0.40.
On the 4-hour chart, the 20 EMA is sloping up and the RSI has entered the overbought zone. This indicates that the bulls are in command, but a small short-term correction or consolidation is possible.
If the buyers sustain the price above $0.48 or the 20 EMA, this will suggest a change in sentiment from selling on the rallies to buying on the dips. This could take the price to $0.54 and subsequently to the downtrend line.
To invalidate this positive view, the bears will have to pull the price below $0.48. If that happens, the pair could slide to $0.44 and then $0.042.
ATOM/USDT
Cosmos (ATOM) has not given up any ground in recent days and is trading near its overhead resistance at $13.45. This indicates that traders are not closing their positions as they expect the price to rise. This is the reason for its inclusion in this list.
The ATOM/USDT pair dipped below the 50-day SMA ($11.08) on Aug. 29, but the bulls bought at the lower levels. This started a bounce that reached the overhead resistance of $13.45. The rising moving averages and the RSI in positive territory indicate that the path of least resistance is to the upside.
If the buyers push the price above $13.45, the pair could pick up momentum and rally to $15.30 and then $20. This positive view could be invalidated if the price turns sharply lower and breaks below the psychological support at 10 dollars.
The 20 EMA is sloping up and the bulls are buying the dips towards this support. This suggests a positive short-term sentiment. The bulls will try to push the price to the overhead resistance of $13.45. This is an important level to watch out for, as a breakout and close above it could signal a resumption of the bullish move.
Conversely, if the price turns down from the current level or overhead resistance and breaks below the 20 EMA, it will suggest that the bears are making mischief at higher levels. The pair could remain in a range between $10 and $13.45 for some time.
FIL/USDT
Filecoin (FIL) had been trading in a tight range between Aug. 27 and Sept. 2, which resolved to the upside on Sept. 3. The expectation that buyers will be able to continue their purchases led to the selection of this coin for this list.
The FIL/USDT pair rallied sharply above the 20-day EMA ($6.39) on Sept. 3, which is the first sign that the buyers are trying to charge back. However, the bears are unlikely to give up easily and are posing a strong challenge near the 50-day EMA ($6.92).
The bears pulled the price back below the 20-day EMA on Sept. 4. If they sustain the price below this level, the pair could drop to $5.50. Conversely, if the price turns up from the current level and breaks above the 50 day EMA, it will suggest strong buying on the dips. The pair could go as high as $9 and then as high as $9.50.
The pair turned down from the upper resistance zone between $6.80 and $6.60, but a small silver lining is that the bulls have not allowed the price to slide below the 20 EMA. If the price bounces from the current level, the possibility of a breakout and close above the area increases.
If this happens, the pair will complete an inverse head and shoulders pattern. The pair could then pick up momentum and rally towards the pattern target of $7.6 and subsequently $8.30.
This positive view could be invalidated in the short term if the price breaks down and closes below the 20 EMA. In that case, the pair could drop to the strong support at $5.50.
EOS/USDT
EOS has made the list because, even in the midst of chaos, it has managed to stay above the moving averages. This indicates a strong short-term performance and increases the probability of a rally if sentiment in the crypto sector improves.
The EOS/USDT pair completed a rounding bottom pattern on Aug. 21, but the bulls were unable to hold the higher levels. The bears pushed the price back below the breakout level on Aug 28, signaling strong selling on rallies.
One small silver lining is that the buyers aggressively bought the dip to the 50-day SMA ($1.33). The 20-day EMA ($1.48) has flattened out and the RSI is close to the midpoint, which indicates a balance between buyers and sellers.
This scale could tip in favor of the bulls if they push and sustain the price above $1.60. The pair could then rally to overhead resistance near $2. Alternatively, a break and close below the 50-day SMA could open the doors for a potential drop to $1.15.
The bears have sold the bounce near $1.60 and are attempting to push the price back below the breakout level of $1.46. If they succeed, the pair could drop to the uptrend line. This level has acted as strong support on three previous occasions, so the bulls will once again try to defend it.
If the price bounces off the uptrendline and breaks above $1.60, the pair could pick up momentum and rally to $1.80 and later $2. Conversely, a breakout and close below the trendline bullish will suggest that the short-term bullish move may be over. The pair could drop to $1.24.
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.