After a nearly 20% rally last week, Bitcoin (BTC) is on track to end this week with gains of roughly 10%. Bitcoin’s rally has improved sentiment and has attracted the purchase of several altcoins. This has pushed the total cryptocurrency market capitalization past the trillion dollar mark.
Bitcoin’s strong recovery has spooked several analysts who remain skeptical of the rally. Some believe the current rally is a dead cat bounce that will reverse direction sharply, while others see similarities between the current rally and the 2018 bear market rally.
Although traders should be prepared for any eventuality, Bitcoin’s rate of rise points to a potential major low. There are likely to be bumps in the road, but traders are likely to aggressively buy dips.
Bitcoin’s sustained recovery may encourage the purchase of certain altcoins.
Let’s study the charts of Bitcoin and some altcoins that are showing strength in the short term.
BTC/USDT
Bitcoin rose above the $21,650 resistance on Jan. 20, signaling a resumption of the rally. This shows that demand remains strong at higher levels.
The bulls broke above the $22,800 resistance on Jan. 21 but failed to consolidate the breakout, as seen on the long wick of the day’s candle.
While the bullish moving averages indicate that the bulls are in command, the RSI in overbought territory warrants caution. It suggests the possibility of a few days of consolidation or minor correction.
Nevertheless, when a new uptrend starts, the RSI sometimes tends to stay in the overbought zone and frustrates the bears. If this happens, the uptrend can continue without a major pullback and the pair could reach $25.211.
On the downside, the first support lies at $21,480. If the pair bounces from this level, the bulls would be buying every time a dip occurs. This could increase the probability of a rally to $25.211.
The four-hour chart shows that the bulls are trying to turn the $22,800 level into support. If the pair continues to rise and breaks above $23.271, the bullish momentum could build and the pair could rush towards $25.211.
If the pair breaks below $22,600, it could reach towards the 20-day EMA. This level can act as support, but if the bears manage to pull the price below it, the next stop could be $21,480.
APE/USDT
ApeCoin (APE) has fluctuated between $7.80 and $3 for the past few months. After the bears failed to sink the price below the range, the bulls are trying to come back. They will try to push the price to the resistance of the range.
The bullish moving averages and the RSI in the overbought zone suggest that the buyers have the upper hand. There is a bit of resistance near $6.40, but if the buyers break it, the APE/USDT pair could reach $7.80. This level could witness aggressive selling by the bears.
The positive view could be invalidated in the short term if the price turns lower and breaks below the 20-day EMA ($4.80). This could sink the price to the 50-day SMA ($4.17).
The four hour chart shows that the pair is in a strong uptrend. The bears are trying to stop the rally at $6, but the bulls have not given up too much ground. This indicates that every little dip is being bought. The bulls will now try to push the price above $6 and resume the uptrend.
Conversely, the bears will try to push the pair below the 20 EMA. If they succeed, the bulls could take profits. The pair could drop as low as $5.
MANA/USDT
Decentraland (MANA) rallied strongly from $0.28 on Dec. 30 to $0.78 on Jan. 21, showing strong bullish momentum.
The bears sold the break above $0.74 on Jan. 17, but the bulls stepped in and bought the dip to $0.61. This shows that sentiment remains positive and traders view dips as a buying opportunity.
The bulls will have to hold the price above $0.74 to signal the start of the next leg of the rally. The MANA/USDT pair could reach $0.87 and, subsequently, the psychological barrier of $1.
If the bears want to take the lead, they will have to sink the price below $0.61. If they do, the pair could start a deeper correction towards $0.53.
The four-hour chart shows the formation of an inverse head and shoulders pattern. If the buyers push the price above the neckline of the pattern, the setup will complete and the pair could shoot towards the target at $0.93.
On the contrary, If the pair turns down from the current level and breaks below the moving averages, the bears would be protecting the $0.74 resistance. The pair could fall to the $0.61-$0.55 support zone.
AAVE/USDT
Aave (AAVE) broke out and closed above the downtrend line on January 17, signaling a possible trend reversal. The bears tried to push the pair back below the downtrend line on Jan. 18, but the bulls held their ground.
The uptrending 20-day EMA ($74) and the RSI in the overbought zone suggest that the bulls have the upper hand. This advantage could be further bolstered by a break above $92. The AAVE/USDT pair could then rally to the psychologically crucial $100 level.
This level could present a strong challenge for buyers again, but if they clear this hurdle, the pair could shoot towards $115.
Conversely, if the pair pulls back and breaks below the downtrend line, it is a sign that the bears are active at higher levels. The advantage may tilt in favor of the bears on a slide below the 20-day EMA.
On the four-hour chart, the bears are defending the $88-$91 area, but they have not been able to place the price below the moving averages. That is why the bulls are buying the dips.
The bulls will try to break out of this zone. If they succeed, the pair could resume the uptrend.
Instead, if the bulls fail to break above $91, the bears will try to push the pair below the moving averages. The pair could drop as low as $78 and then as low as $73.
FIL/USDT
Filecoin (FIL) broke above the downtrend line on January 14 and held the retest of the breakout level on January 18. This suggests that the bulls have turned the downtrend line into support.
The moving averages have completed a bullish crossover and the RSI is in the overbought zone, indicating that the bulls are in control. The FIL/USDT pair could rally to $6.50 where the bears could mount a strong defense again. If the bulls break out of this level, the move higher could reach $9 with a short stop near $7.
The 20-day EMA ($4.24) is the important support to watch on the downside, as a drop below could tip the advantage in favor of the bears.
The bears tried to stop the relief rally at $5, but the bulls broke through this resistance and started the next leg of the rally.. The bullish moving averages and the RSI in the overbought zone indicate that the bulls are firmly in the driver’s seat. The buyers will try to push the pair towards $6.50 and then $7.
To the downside, the 20 EMA is the critical support to watch. If the price bounces from this level, it will indicate that the uptrend remains intact. On the other hand, if the bears drag the price below the moving averages, the pair could plunge as low as $4.20.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.