The rise of the US dollar has slowed the recovery of the Bitcoin price, but the lower levels are likely to attract buyers of BTC and altcoins such as DOGE.
The US Dollar Index (DXY) has started a strong recovery and its rise is putting pressure on Bitcoin (BTC) and the S&P 500 Index (SPX). Market participants will be closely watching for any hints about future rate hikes when Federal Reserve Chairman Jerome Powell speaks to the Economic Club of Washington on February 7.
Meanwhile, Bitcoin’s 43% rally in January has improved sentiment among retail investors. Cryptocurrency analytics firm Santiment said the number of Bitcoin addresses with 0.1 Bitcoin or less shot up by 620,000 to hit 39.8 million, the highest level since Nov. 19.
With the feeling turning positive, traders often buy dips as they anticipate the uptrend to continue. However, some analysts believe that dip buyers will be trapped and Bitcoin could drop to the $19,000-$21,000 support zone or, even worse, witness a capitulation in the coming weeks.
Could the S&P 500 and cryptocurrency markets see some short-term profit-taking? What are the critical support levels to watch? Let’s study the graphs to find out.
The S&P 500 Index soared above the 4,101 resistance on Feb. 1, but the bears are unlikely to go down without a fight. They will try to push the price back above 4.101 and catch the aggressive bulls.
Bulls should try to protect the area between 4.101 and the 20-day exponential moving average (4.033). If the price bounces in this zone, the chances of it breaking above 4,200 points increase. This could clear the way for a possible rally to 4,300 where the bears could erect a strong barrier again.
To the downside, the 20 day EMA is the crucial support to watch. If it breaks down and closes below, the bulls could be losing control, putting the index in danger of falling to the uptrend line.
The US dollar index rallied strongly on February 2, indicating aggressive buying at lower levels. The buyers maintained their momentum and pushed the price above the 20-day EMA (102) on February 3.
The index could rally to the resistance line of the falling wedge, where the bears will try to stop the rally. This is an important level that sellers will need to defend if they are to maintain the advantage.
On the other hand, the bulls will have to push and hold the price above the wedge to initiate a significant rally towards 108. The 20 day EMA is flattening out and the RSI has jumped into the positive territory, which indicating that selling pressure may be easing.
Bitcoin has pulled back to the crucial support zone between $22,800 and the 20-day EMA ($22,489). This is an important area that bulls need to protect if they want to keep the uptrend intact.
If the price bounces from here, the bulls will try to push the BTC/USDT pair above $24,255 and challenge the overhead resistance at $25,000. Bears will want to watch this level with all their might, as a breakout and close above $25,000 could signal that the bear market is over for good.
Conversely, a deeper pullback would come into play if the price turns lower and breaks below the 20 day EMA. Important levels to watch on the downside are $21,480 and the 50-day SMA ($19,697).
Ether (ETH) is holding between the 20-day EMA ($1,591) and the overhead resistance of $1,680. This tight range trading is unlikely to continue for very long, and a breakout is possible soon.
If the price breaks below the 20-day EMA, the ETH/USDT pair could continue lower and reach towards $1,500. This level could attract buyers, and a bounce from there would keep the pair in the $1,500-$1,680 range for a few days.
Bears will need to sink the pair below $1,500 to take advantage. Then the pair could start a deeper correction towards $1,352. On the other hand, buyers will need to push the pair above $1,680 to start a rally to $1,800 and $2,000 thereafter.
Buyers pushed BNB (BNB) trading above the $335.50 resistance on Feb. 5. But the long wick of the candle shows that the bears are selling at higher levels. The price pulled back to the breakout level of $318 where the bulls are buying aggressively as seen in the long tail of the February 6 candle.
The bears will have to sink the price below the 20-day EMA ($312) to clear the way for a decline to the 50-day SMA ($281).
On the contrary, if the price rallies from the current level and breaks above $338, it will suggest that the bulls have turned the $318 level into support.. The BNB/USDT pair is likely to resume the rally and reach towards $360. This level should provide solid resistance, but if the bulls break above it, the next big hurdle will be $400.
The failure of the bulls to push the price of XRP (XRP) above $0.42 on Feb. 4 shows that the bears are keeping a fierce eye on this level. Emboldened bears pulled the price below the 20-day EMA ($0.40) on Feb. 5.
The price action of the past few days has flattened the 20-day EMA and the RSI has also slid close to the midpoint, indicating a balance between supply and demand. This could keep the pair range-bound between $0.37 and $0.42 for some time.
If the bulls want to establish their dominance, they will have to push the price above the $0.42 to $0.44 resistance zone. If they succeed, the XRP/USDT pair has a chance of reaching $0.51. Conversely, if the bears sink the price below $0.37, the selling could intensify and the pair risks falling towards $0.32.
Bulls tried to clear the $0.10 hurdle again on Feb. 4, but bears held their ground. This pushed Dogecoin (DOGE) back to the 20-day EMA ($0.09) on Feb. 5.
The DOGE/USDT pair has been stuck between the 20-day EMA and $0.10 for a few days now. Normally, tight ranges are resolved with a sharp breakout of the range, but it is difficult to predict the direction with certainty.
As the 20 day EMA is sloping up and the RSI remains in the positive zone, the bulls have a slight advantage.. If they break above $0.10, the next stop could be $0.11. This level can act as a hurdle, but if the bulls break above it, the DOGE price could reach $0.15.
This positive view will be invalidated in the short term if the price breaks below the 20 day EMA. Then the pair could reach the 50-day SMA ($0.08).
The long tail on the February 5 candle for Cardano (ADA) shows that buyers are trying to turn the $0.38 level into support.
If the buyers want to strengthen their position, they will have to quickly kick the price above the resistance at $0.42. If they do, the ADA/USDT pair could extend its move higher to $0.44. This level can act as formidable resistance on the way up, but as long as the price remains above the 20-day EMA, the bulls will remain in control.
In order for the bears to regain control, they will have to sink the price below the 20 day EMA. That could tempt short-term bulls to take profits, putting Cardano’s price in danger of collapsing to the 50-day SMA ($0.32).
The long wick of the February 4 Polygon (MATIC) candlestick shows that traders may have taken profits near the $1.30 overhead resistance.
The bullish 20-day EMA ($1.11) and the RSI in the positive zone indicate that buyers are in control. The possibility of a break above $1.30 increases price reversal from the current level or the 20-day EMA, which could push MATIC to $1.70.
A negative point on the chart is the negative divergence on the RSI. This indicates that the buying pressure is easing. If the bears sink the price below the 20-day EMA, MATIC could drop to $1.05 and then the 50-day SMA ($0.93).
Buyers try to protect the resistance line breakout level but face selling on rallies. The RSI is showing negative divergence, but a small positive is that the bulls have managed to hold Polkadot (DOT) above the 20-day EMA ($6.33).
The bulls will try to push the price above the resistance at $7.13 and resume the upside move. The next stop could be at $7.42, where the bulls are likely to face strong selling pressure. If the buyers don’t give up much ground from $7.42, the DOT/USDT pair should have a good chance to rally towards $8.
On the contrary, If the bears pull the pair below the 20-day EMA, it will signal the start of a deeper correction.. The support level to watch for a pullback is $6, but if it doesn’t hold, the fall can extend to the 50-day SMA ($5.43).
This article does not contain investment advice or recommendations. All investments and trades carry risks, and readers should do their own research when making a decision.