Crypto and equity markets corrected as investors got nervous ahead of FOMC minutes. But the main point of stress is whether investors will buy from the bottom. What are the critical levels on the downside for Bitcoin (BTC) and altcoins to suggest that the recovery might stall? Crypto analyst Rakesh Upadhyay examines the charts of the top 10 cryptocurrencies to find out.
An overview of the cryptocurrency market
The bounce of Bitcoin (BTC) gushed around $24,500 on August 17, suggesting that the recovery is still facing stiff resistance from the bears. On-chain tracking resource Material Indicators says demand liquidity on Fire Charts is similar to previous local peaks.
Another reason to be cautious among crypto investors is that the recovery in the S&P 500 has reached overbought levels in the near term. Jurrien Timmer, global macro director at asset manager Fidelity Investments, says 88% of stocks in the S&P 500 are trading above their 50-day moving averages, which is ‘surprising’.
Daily cryptocurrency market performance / Source: Coin360While the short-term may seem uncertain, institutional investors, who are generally in the long-term game, have increased their investments in the blockchain industry, including the crypto space. According to Blockdata’s report, as you follow on Kriptokoin.com, the top 40 publicly traded companies invested approximately $6 billion in Blockchain startups between September 2021 and June 2022. That’s more than triple the $1.9 billion invested by companies between January 2021 and September 2021. Now it’s time for analysis…
BTC, ETH, BNB, XRP and ADA analysis
Bitcoin (BTC)
The bulls tried to push Bitcoin (BTC) above the overhead resistance at $24,668 on August 17. However, the long wick on the candlestick indicates that the bears are defending the level aggressively. BTC price dropped and reached the 20-day exponential moving average (EMA) ($23,496). This level is likely to attract strong buying from the bulls.
The 20-day EMA has flattened and the relative strength index (RSI) has dropped near the midpoint. This shows that there is a balance between supply and demand. If the price stays below the 20-day EMA, the balance is likely to turn in favor of the bears and Bitcoin (BTC) to drop to the 50-day SMA ($22,160). Conversely, if the price bounces back from the current level and rises above $25,200, it indicates that the bulls are in command again. It is possible for Bitcoin (BTC) to rally to $28,000 later, where the bears can form a strong defense again.
Ethereum (ETH)
ETH rose from $1,853 on August 16. The bulls tried to push the price above $2,000 on August 17. However, the long wick on the day’s candlestick indicates that traders may moderate their positions on rallies.
The bears will try to take advantage of the situation. It will try to pull the price into the strong support zone between the 20-day EMA ($1,772) and $1,700. This is an important zone for the bulls to defend if they want to keep the bullish trend intact. If the price bounces back from this support zone, ETH is likely to retest the resistance at $2,030. A break and close above this level is likely to clear the way for a rally to the downtrend line. Instead, if the $1,700 support is broken, a drop to the 50-day SMA ($1,492) is possible for ETH. This is likely to delay the start of the next leg of the up move and keep ETH range-bound for a few days.
Binance Coin (BNB)
Buyers tried to pull BNB up on August 17. However, the long wick on the candlestick indicates that the bears are active at higher levels. This brought the price to the 20-day EMA ($307).
If the price breaks below the 20-day EMA, a drop to the 50-day SMA ($270) is possible for BNB. This level is likely to attract repeat purchases. If the price rebounds, BNB is likely to consolidate between $270 and $338 for a while. Another possibility is that the price will come out stronger from the current level. If this happens, it indicates that sentiment remains positive and traders are buying on dips. The bulls will then again attempt to clear the overhead resistance zone between $338 and $350. If they are successful, it is possible for BNB to start a rally to $383 and then to $413.
Ripple (XRP)
The bulls have successfully defended the zone between the moving averages. In this way, he tried to push Ripple (XRP) above the overhead resistance at $0.39 on August 17. The long wick in the day’s candlestick is a sign that the bears are not willing to surrender. It also shows that they continue to fiercely defend the resistance at the top.
If the price breaks and closes below the 20-day EMA ($0.37), the next stop is likely to be the 50-day SMA ($0.35). This is an important level for the bulls to defend. Because a break and close below this would indicate that XRP could continue its range-bound move between $0.30 and $0.39 for a few more days. Alternatively, if the price bounces back from the moving averages, the bulls will again attempt to clear the overhead barrier at $0.39. If they are successful, it is possible for XRP to rally to $0.48 and then $0.54.
Cardano (ADA)
ADA bounced off the $0.55 breakout level on August 16. However, the bears continue to pose a strong challenge higher, as seen from the long wick on the August 17 candlestick.
The sharp sell-off by the bears pushed the price to significant support at the 20-day EMA ($0.53). A break and close below this level will indicate that the short-term advantage is turning in favor of the sellers. ADA is likely to drop to the 50-day SMA ($0.49) later. Conversely, if the price bounces back from the 20-day EMA, it will suggest strong demand at lower levels. The bulls will then try to continue the upward move by pushing ADA above $0.60. It is possible that this could open the doors for a possible rally to $0.63 followed by $0.70.
SOL, DOGE, DOT, SHIB and AVAX analysis
Left (LEFT)
SOL has attempted a recovery from the 20-day EMA ($42). However, the long wick on the August 17 candlestick indicates that the bears are selling on every small rise.
The bears will try to push the price below the support line. If they succeed, the developing bullish will invalidate the ascending triangle pattern. SOL is likely to drop to $37.50 later and then to $34.50. Alternatively, if the price bounces off the moving averages, it will indicate that the bulls may be accumulating on the dips. Buyers will then try to push the price above the overhead resistance at $48. If they are successful, the ascension setup will be complete. So it will be possible for SOL to start a rally towards $60.
Dogecoin (DOGE)
The bears pushed Dogecoin below the $0.08 breakout level on August 15. However, it failed to sustain lower levels. The bulls bought the dip aggressively and continued the recovery on August 16.
The bears are trying to stop the recovery at $0.09. However, if the bulls do not allow the price to drop below $0.08, the probability of a rally to $0.10 increases. This is an important level to focus on. Because a break and close above it is possible to signal a potential trend change. The 20-day EMA ($0.07) has started to rise and the RSI is in the positive territory. This shows that the bulls have the upper hand. To invalidate this bullish view, the bears will need to push the price below the trendline of the triangle and sustain it.
Polkadot (DOT)
The bulls successfully defended the 20-day EMA ($8.62) on August 15 and 16. However, they failed to make a strong recovery. Attempts by the bulls to push Polkadot above the overhead resistance at $9 faced stiff resistance on August 17.
The bears are trying to keep the price below the 20-day EMA. If they are successful, it is possible that they will trap a few aggressive bulls who may have bought at higher levels. This is likely to push the DOT down to the 50-day SMA ($7.72). Conversely, if the price rises from the current level and rises above $9, it indicates that the bulls are buying aggressively at the lower levels. The bulls will then attempt to push the DOT above the overhead resistance at $9.68 and continue the recovery. The DOT is likely to rally to $10.80 and then $12.44 later.
Shiba Inu (SHIB)
The correction of the Shiba Inu stopped at $0.000015 on August 15. However, the bulls are facing stiff resistance at the overhead resistance of $0.000017 as seen from the long wick on the August 16 and 17 candlesticks.
Failure to clear the general hurdle could discourage bears who will try to push the price towards strong support at $0.000014. This is an important level for the bulls to defend. Because a break below this and a close is likely to weaken the positive momentum. It is possible for SHIB to be stuck in a wide range between $0.000010 and $0.000018 for a few days afterwards. Alternatively, if the price rises from the current level and rises above the overhead resistance area of $0.0017 and $0.000018, a rally to $0.000022 is possible for SHIB. If the bulls break this hurdle, the rally is likely to extend to $0.000026.
Avalanche (AVAX)
AVAX continues to slide towards the breakout level of $26.38. The bulls are likely to buy the dip and try to turn this level into support.
If the price gains strength at $26.38, buyers will again try to push AVAX above the overhead resistance at $31. If successful, AVAX is likely to rally to $33 followed by a model target of $39.05. Contrary to this assumption, if the price breaks below the breakout level, a few aggressive bulls are likely to fall into the trap. It is possible that this will result in a drop to the 50-day SMA ($22.70) and then to the support line of the ascending triangle.
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