Bitcoin’s recovery may trigger buying in these 4 altcoins
The S&P 500 Index (SPX) closed the week with a nominal loss of 0.29% but Bitcoin (BTC) is on target to finish the week with a deeper cut of more than 5%. The weakness in Bitcoin pulled several altcoins lower, indicating weakening sentiment.
A silver lining is Bitcoin’s solid bounce on May 12. Several analysts anticipate Bitcoin to start a recovery but monitoring resource Material Indicators sounded cautious.
In a recent analysis, they said that the lack of a strong bid from the whales at lower levels could be a concerning sign. They believe that the bullish perspective will invalidate if Bitcoin sustains below the 200-week moving average.
Over the next few days, the progress on the debt ceiling talks between leaders from Congress and the White House is expected to take center stage. The uncertainty and risks of a potential U.S. default could keep the rally in the equities markets under check but it is difficult to predict how Bitcoin and altcoins will react to all the chaos.
Bitcoin has started a corrective phase and most altcoins have broken below their respective support levels. Only a handful of cryptocurrencies are looking positive on the charts. Let’s analyze the chart of the top five cryptocurrencies that may turn up in the near term.
Bitcoin price analysis
The long tail on Bitcoin’s May 12 candlestick shows that the bulls are aggressively buying the dips to the neckline of the inverse head and shoulders (H&S) pattern.
Buyers will try to push the price back into the triangle but may face stiff resistance from the bears. The downsloping 20-day exponential moving average ($27,959) and the relative strength index (RSI) below 41 indicate that bears have a slight edge.
If the price turns down from the 20-day EMA, the bears will again attempt to sink the BTC/USDT pair below $25,250. If they can pull it off, the selling may intensify and the pair could crash to $20,000.
On the upside, the bulls will have to clear the hurdle at the resistance line to regain control. The pair may then retest the overhead resistance at $31,000.
After facing stiff resistance at the 20-EMA, the bulls have cleared the obstacle. This indicates that the bulls are trying to seize control. The pair may first climb to the 50-simple moving average and then to $28,400.
On the contrary, if the price turns down sharply from the current level, it will suggest that the bears are trying to flip the support line of the triangle into resistance. The pair may then plunge to the crucial support at $25,250.
Cardano price analysis
Cardano’s (ADA) solid rebound off the uptrend line on May 11 suggests that lower levels continue to attract strong buying.
The bulls will try to resume the recovery by propelling the price to the 20-day EMA ($0.38). This level may act as a minor barrier but if bulls overcome it, the ADA/USDT pair could soar toward the neckline of the inverse H&S pattern. This level is likely to witness a tough battle between the bulls and the bears.
Another possibility is that the price turns down from the 20-day EMA and drops to the uptrend line. The repeated retest of a support level at short intervals tends to weaken it. That may open the doors for a potential fall to $0.30.
The bulls pushed the price above the moving averages, indicating that the bears may be losing their grip. The 20-EMA has started to turn up gradually and the RSI is in the positive zone, indicating that the bulls are on a comeback.
If buyers pierce the overhead resistance at $0.37, the pair could pick up momentum and rally to $0.40 and later to $0.42. Conversely, if the price turns down from $0.37, the pair may slide to the uptrend line.
Cosmos price analysis
Cosmos (ATOM) snapped back from the $10.20 support on May 10, indicating that the bulls are buying the dips to this level.
The bears are trying to halt the relief rally at the 50-day SMA ($11.28) but the bulls have not given up much ground. This enhances the prospects of a rally above the 50-day SMA. If that happens, the ATOM/USDT pair could rally to the downtrend line.
This is an important level for the sellers to guard because a break above it will invalidate the bearish descending triangle pattern.
The critical support to watch on the downside is $10.20. If it cracks, the descending triangle will complete and the pair may then plummet to $8.50.
The 4-hour chart shows that the relief rally is facing selling at higher levels but the price action is forming a possible inverse H&S pattern that will complete on a break and close above $11.30. The pair may then start an up-move to $12 and subsequently to $12.50.
Alternatively, if the price turns down and breaks below the 50-SMA, it will suggest that the bears are in control. The pair may then slump toward the vital support at $10.20. A bounce off this level could keep the pair inside the boundaries of $11.30 and $10.20 for a while longer.
Related: 4 alarming charts for Bitcoin bulls as $27K becomes formidable hurdle
Lido DAO price analysis
Lido Dao (LDO) rebounded off the $1.60 support and has reached the overhead resistance at the 20-day EMA ($1.95).
The bears are trying to protect the 20-day EMA but the bulls have not given up. This suggests that the buyers expect the recovery to continue. If bulls drive the price above the 20-day EMA, the LDO/USDT pair could rally to the downtrend line. This level is likely to attract strong selling by the bears.
If buyers arrest the next decline above the 20-day EMA, it will suggest a change in sentiment from selling on rallies to buying on dips. The pair could then start a sustained recovery above the downtrend line.
On the downside, the bears will have to sink and sustain the price below $1.60 to indicate the resumption of the downtrend.
The 4-hour chart shows that the bulls are trying to propel the price above the overhead resistance at $1.98. If they succeed, the pair will complete a bullish double bottom pattern. This reversal setup has a target objective of $2.39. If this level is also crossed, the pair may reach $2.60.
Contrarily, if the price turns down from the current level or $1.98 and breaks below the moving averages, it will suggest that bears are active at higher levels. That may keep the pair stuck between $1.57 and $1.98 for some time.
Arbitrum price analysis
Arbitrum (ARB) has been finding support near the psychologically important level of $1, indicating that the bulls are aggressively buying the dips.
On the upside, the bears have been attempting to stall the recovery at $1.20 but a minor positive in favor of the bulls is that they have kept up the buying pressure. That increases the likelihood of a break above $1.20. If that happens, the ARB/USDT pair could rise to $1.40 and later to $1.50.
This positive view will invalidate in the near term if the price turns down sharply from $1.20. That will point to a possible consolidation between $1 and $1.20 for a few days.
The 20-EMA on the 4-hour chart has started to turn up and the RSI is in the positive territory indicating that the selling pressure is reducing. Buyers will try to strengthen their position by pushing the pair above $1.20. If they do that, the pair will complete a double bottom pattern, which has a target objective of $1.35.
The first sign of strength for the bears will be a break and close below the 20-EMA. That could pull the pair to $1.05. A slide below $1 will signal the resumption of the downtrend.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Source: Cointelegraph.com
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