Bitcoin’s attempt to bottom has enticed altcoin traders to focus on ETH, MATIC, FTT, and ETC.
US equity markets recovered from their week-on-week lows last week, suggesting that there is demand at lower levels. In a similar vein, Bitcoin (BTC) has also rebounded from $18,910 last week, indicating that traders may be turning back to risk assets.
However, analysts remain divided in their opinion on Bitcoin’s recovery. While some believe that the relief rally is a bull trap, others expect the move higher to retest crucial resistance at the 200-week moving average ($22.626).
The current bearish phase has hurt sentiment, as seen in the cryptocurrency fear and greed index, which has remained in the “extreme fear” zone since May 6. According to Philip Swift, creator of on-chain analytics platform LookIntoBitcoin, the time spent in the “extreme fear” category is longer than during the 2018 Bitcoin bear market.
Could sentiment take a turn driving crypto prices higher? Let’s study the charts of the top 5 cryptocurrencies to identify potential breakout assets.
BTC/USDT
Bitcoin broke above the 20-day exponential moving average ($20,894) on July 15, but the bulls have not been able to capitalize on this advantage. The bears are likely to vigorously defend the resistance line of the symmetrical triangle.
The 20-day EMA has flattened out and the RSI has risen close to the midpoint. This suggests a balance between supply and demand.
The first sign of strength will be the breakout and close above the 50-day SMA ($23.445). This could pave the way for a potential rally towards the trend target of $28.171. This move will suggest that the BTC/USDT pair may have bottomed out at $17,622.
On the other hand, if the price turns down and breaks below the 20-day EMA, the pair could extend its stay inside the triangle for a few more days. Price action within the triangle is likely to be random and volatile. A breakout and close below the triangle could indicate that the bears have taken the reins again.
The moving averages have been crossing over for a long time, indicating a range formation. The bears will try to push the price below the moving averages. If they succeed, the pair could drop to as low as $20,000. A break below this support could open the doors to a possible drop to the support line.
On the other hand, if the price bounces off the moving averages, it will suggest that the bulls are buying the dips. This could improve the prospects for a breakout of the triangle. The pair could rally to the overhead resistance of $23.363.
ETH/USDT
Ether (ETH) completed an ascending triangle pattern as the bulls pushed the price above $1,280 on July 16. The bears are trying to push the price back below the breakout level and catch the aggressive bulls.
The critical level to watch on the downside is $1,280. If the price bounces off this level, it will suggest that the bulls have turned $1,280 into support. This could improve the prospects for a resumption of the upward movement. The ETH/USDT pair could then rally to $1,700, where the bears could once again pose a strong challenge.
Conversely, if the price turns down and breaks below the 20-day EMA ($1,206), it will suggest that the bears are selling on the upside. This could sink the pair towards the support line of the triangle.
On the 4-hour chart, the 20 EMA is sloping up and the RSI is close to the overbought zone, which indicates that the bulls have the upper hand. If the price breaks above $1,423, the pair could pick up momentum and rally to $1,550 and then $1,700.
Conversely, if the price turns down from the current level, the bulls will try to stop the decline at the 20 EMA. This is an important level to watch out for because a breakout and close below it could sink the pair to the 20 EMA. 50 days.
MATIC/USDT
Polygon (MATIC) completed an ascending triangle pattern as the price broke above the resistance at $0.63 on July 13. This was the first indication of the beginning of a new uptrend.
The moving averages have completed a bullish crossover, which suggests that the buyers have the upper hand. Nevertheless, the price action of the past few days has pushed the RSI into the overbought zone, indicating that a small pullback or short-term consolidation is likely.
The critical level to watch on the downside is $0.63. If the price bounces off this support, it will suggest that the lower levels are attracting buying by the bulls. This could increase the possibility that the uptrend will resume. The MATIC/USDT pair could then rally to the pattern target of $0.95.
This positive view could be invalidated if the price turns down and drops below the 50-day SMA ($0.54).
The recovery broke above the overhead resistance of $0.75, but that pushed the RSI into the overbought zone. This suggests a small short-term correction or consolidation.
The bears will try to push the price below the 20 EMA. If this happens, the pair could drop to the 50-day SMA.
On the other hand, if the price bounces off $0.75 or the 20 EMA, it will indicate that the bulls are in control. This will increase the probability that the uptrend will resume.
FTT/USDT
The price action of FTX Token (FTT) over the past few days has resulted in the formation of a symmetrical triangle. This normally acts as a continuation pattern, but in some cases, it also works as a rollback setup.
The moving averages are on the verge of a bullish crossover and the RSI has risen into the positive zone, indicating that the buyers have a slight edge. The breakout of the resistance line of the triangle will indicate that the uncertainty has been resolved in favor of the buyers.
This could signal the start of a new uptrend that could reach $32 and subsequently the pattern target of $36.50. Contrary to this assumption, if the price turns down from the resistance line, the FTT/USDT pair could extend its stay inside the triangle for a few more days.
The 4-hour chart shows that the price has reached the resistance line of the triangle, where the bears are expected to mount a strong defense. If the price turns down from the current level but bounces off the 20 EMA, it will indicate that traders are buying the dips. That could increase the prospects for a break above the triangle.
This positive view could be invalidated in the short term if the price continues to decline and break below the 20 EMA. That could push the pair towards the 50-day SMA, which would indicate that range-bound action could continue for a few more days.
ETC/USDT
Ethereum Classic (ETC) broke out of the $12.50-$18 range that it had been stuck in for the past few days. This suggests that the bulls are trying to form a double bottom pattern.
The 20-day EMA ($15.87) has started to turn to the upside and the RSI has approached the overbought zone, which indicates that the bulls have the upper hand. The critical level to watch on the downside is $18. If the bulls sustain the price above this support, the ETC/USDT pair could start its march north towards $23.50 and then $25.
Conversely, if the price turns down and slides below 18, the pair could drop to the moving averages. A break below the 20-day EMA could suggest that the bears are still active at higher levels.
The strong rise above $18 has pushed the RSI into the overbought zone. This suggests a small short-term pullback or consolidation. The bears will try to push the price back below the breakout level, while the bulls will try to defend it.
If the price bounces off $18, it will suggest that the bulls have turned the level into support. This could increase the possibility that the upward movement will resume. On the other hand, a break below $18 could strengthen the bears who will try to push the pair to $16.
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.