Bitcoin is attempting to form a higher low at $28,630 and if that happens, ETH, XTZ, KCS and AAVE may rally in the near term.
After declining for eight successive weeks, the Dow Jones Industrial Average rebounded sharply last week to finish higher by 6.2%. However, Bitcoin (BTC) has not been able to replicate the performance of the United States equities markets and is threatening to paint a red candle for the ninth week in a row.
A positive sign is that Bitcoin whales have been buying the market correction. Glassnode data shows that the number of Bitcoin whale wallets with a balance of 10,000 Bitcoin or more has risen to its highest level since February 2021. The accumulation in the whale wallets suggests that their long-term view for Bitcoin remains bullish.
Blockware Solutions highlighted that the Mayer Multiple metric, which compares the 200-day simple moving average with the current price, was languishing “near some of the lowest readings on record.” The firm said a few other indicators also suggest that Bitcoin is attempting to form a bottom.
If Bitcoin starts a recovery in the short term, certain altcoins are likely to follow it higher. Let’s study the charts of the top-5 cryptocurrencies that may lead the relief rally.
BTC/USDT
Bitcoin remains stuck inside a tight range between the downtrend line and the support at $28,630. The bears pulled the price below $28,630 on May 26 and May 27 but could not sustain the lower levels. This resulted in a rebound on May 28.
The bulls will now try to push the price above the downtrend line and challenge the 20-day exponential moving average (EMA) of $30,538. If they succeed, the BTC/Tether (USDT) pair could pick up momentum, and the rally could reach the 50-day simple moving average (SMA) of $35,181.
The positive divergence on the relative strength index (RSI) suggests that the bearish momentum could be weakening and a rally may be around the corner.
On the other hand, if the price turns down from the overhead resistance, the bears will again try to pull the pair below $28,630. If they manage to do that, the pair will complete a bearish descending triangle pattern, which has a target objective of $24,601.
The 20-EMA and the 50-SMA on the 4-hour chart have flattened out and the RSI is just above the midpoint, suggesting a balance between supply and demand.
If bulls drive the price above the downtrend line, the negative descending triangle pattern will be negated. That could result in a short squeeze as the short-term bears may close their positions. That could clear the path for a possible rally to the 200-SMA.
Conversely, the bears will come out on top if the price turns down and plummets below $28,630. That could result in a retest of the crucial support at $26,700.
ETH/USDT
Ether (ETH) has been in a downtrend but the bulls are attempting to stall the decline at the crucial support of $1,700. The price rebounded off this support on May 28 and the bulls are attempting to build on the recovery on May 29.
The RSI is forming a bullish divergence, indicating that the downtrend may be weakening. If bulls push the price above the 20-day EMA of $2,036, the ETH/USDT pair could rise to the overhead resistance at $2,159. The bears are expected to defend this level aggressively. If the price turns down from this resistance, the pair may remain range-bound between $2,159 and $1,700 for a few days.
On the other hand, if the price turns down from the current level or the 20-day EMA, the bears will again attempt to sink the pair below $1,700. If they succeed, the pair may resume its downtrend with the next major support at $1,300.
The bounce off the $1,700 support has reached the 20-EMA, where the bears may mount a strong defense. If the price turns down from this level, it could enhance the prospects of a break below $1,700. If that happens, the downtrend may resume.
Conversely, if bulls push the price above the 20-EMA, the pair may rise to the 50-SMA. This level may again act as a resistance but if bulls clear this hurdle, the pair could rally to the psychological resistance at $2,000.
XTZ/USDT
Tezos (XTZ) is consolidating in a downtrend. Although bulls pushed the price above the 20-day EMA of $2.00 on May 24, they could not sustain the recovery. The price dipped back below the 20-day EMA on May 26.
The 20-day EMA is flattening out and the RSI is above 46, suggesting that the selling pressure is reducing. If bulls push the price above the 20-day EMA, the XTZ/USDT pair could rally toward the 50-day SMA of $2.45. If this resistance also gives way, the buyers will attempt to push the price above the uptrend line.
In contrast, if the price turns down from the current level, it will suggest that bears continue to defend the 20-day EMA. The sellers will then attempt to sink the pair below $1.75, which could open the doors for a fall to $1.64.
The 4-hour chart shows the recovery turned down from the 200-SMA, but the pair bounced off the uptrend line. The bulls have pushed the price above the 50-SMA and will now attempt to clear the overhead hurdle at the 200-SMA. If they manage to do that, it will suggest the start of a short-term up-move.
Alternatively, if the price turns down from the current level or the 200-SMA, the pair may drop to the uptrend line. A break and close below this support could pull the price down to $1.61.
( Rakesh Upadhyay, Cointelegraph, 2022 )