Last week’s decline in US stock markets extended the market’s losing streak to three consecutive weeks. For the first time since 2019, the Nasdaq Composite has fallen for six days in a row. A negative market reaction to August’s seemingly positive jobs report suggests traders are worried about the Federal Reserve’s future actions and their impact on the economy.
Weakness in US stock markets pushed Bitcoin (BTC) back below $20,000 on September 2, and bears kept the price below that level over the weekend. This brought Bitcoin’s market dominance down to just under 39 percent on Sept. 4, the lowest level since June 2018, according to CoinMarketCap data.
Although it is difficult to call the bottom negative, investors who believe in the long-term prospects of cryptocurrencies can take the opportunity to gradually build lower levels instead of trying to catch the bottom. However, investors avoid chasing price increases during bear market rallies and look to buy when prices drop to strong support levels.
If Bitcoin makes a recovery, select altcoins could go higher. Let’s study the charts of the top-5 cryptocurrencies that look strong on the charts.
BTC/USDT
Bitcoin has been trading in a tight range between $19,520 and $20,576 for the past few days, indicating a near-term balance between buyers and sellers. Although the bulls bought on the dips, they could not beat the sell-off at the high level.
The low of the 20-day EMA ($20,863) and the relative strength index (RSI) in the negative territory indicate the advantage of the sellers. If the bears break below $19,520, the BTC/USDT pair may drop to a strong support zone between $18,910 and $18,626.
This zone can attract strong buying by bulls as seen in the previous two occasions. The bears need to break below $17,622 to signal the resumption of the downtrend.
On the other hand, buyers should push and hold the price above the 20-day EMA to signal that the bears may lose their grip. The pair may rise towards the 50-day simple moving average ($22,271).
The price has rebounded from strong support near $19,520, but bears are trying to stop the recovery at the moving averages. This shows that bears sell on every minor rally. If the bears enter the price below $19,520, the pair can continue the next leg down.
Contrary to this assumption, if the bulls push the price above the moving averages, the pair may try to resist the resistance of the range at $20,576. Buyers need to clear this barrier to signal a possible trend reversal in the near future.
ADA/USD
Cardano (ADA) is consolidating but trying to break above the moving averages. This shows the interest in the lower levels and increases the chances of moving up, which is why it was chosen.
The 20-day EMA ($0.47) has been extended and the RSI has jumped into positive territory, indicating that the selling pressure is waning. If buyers support the price above the 50-day SMA ($0.50), the ADA/USDT pair may enter the lower line.
This level could again serve as strong resistance, but if the bulls overcome this barrier, the pair could rally to $0.70.
If the price declines from current levels and slips below the 20-day EMA, this positive outlook may be invalidated in the short term. If that happens, the pair could slide back to the strong support at $0.40.
The 20-EMA on the 4-hour chart is trending higher and the RSI has risen into overbought territory. This indicates that the bulls are in command but a slight correction or consolidation is possible in the near future.
If buyers continue above $0.48 or the 20-EMA, it would indicate a change in sentiment from selling on rallies to buying on dips. That could push the price to $0.54 and then to the lower line.
To spoil this positive outlook, bears need to take the price below $0.48. If that happens, the pair could slide to $0.44 and then to $0.42.
ATOM/USDT
Cosmos (ATOM) has not been disappointed in the past few days and is trading near the upside resistance at $13.45. This indicates that traders are not closing their positions in anticipation that the price may rise. This is the reason why it is included in this list.
The ATOM/USDT pair dipped below the 50-day SMA ($11.08) on August 29, but the bulls bought the lows. That started a rebound that hit resistance at $13.45. The gradually rising moving averages and the RSI in the positive range indicate that the path of least resistance is up.
If buyers push the price above $13.45, the pair may rally to $15.30 and then $20. If the price declines significantly and falls below psychological support at $10, this positive outlook may invalidate it.
The 20-EMA is trending higher and the bulls are buying dips for this support. This shows a positive feeling in the short term. The bulls will try to push the price to higher resistance at $13.45. This is an important level to monitor because a break above it and a close could indicate a resumption of activity.
Conversely, if the price breaks below the current level or resistance from above and breaks below the 20-EMA, it suggests that bears are overactive. The pair may remain in the range between $10 and $13.45 for some time.
Related: Growing or clearing? Why the merger does not save the price of Ethereum from ‘September’
file/USDT
Filecoin (FIL) traded in a narrow range between August 27th and September 2nd, which resolved to the upside on September 3rd. Speculation that buyers may continue to buy has fueled the bullishness of this coin.
The FIL/USDT pair rallied well and broke above the 20-day EMA ($6.39) on September 3. This is the first indication that buyers are trying to return. However, the bears cannot easily surrender and are making a strong challenge near the 50-day SMA ($6.92).
The bears pulled the price back below the 20-day EMA on September 4. If you set the price below this level, the pair can drop to $5.50. Conversely, if the price breaks above the current level and breaks above the 50-day SMA, it suggests strong buying on dips. The pair can be raised to $9 and then to $9.50.
The pair declined from the upper resistance zone between $6.80 and $6.60 but a slight positive is that the bulls did not allow the price to drop below the 20-EMA. If the price recovers from the current level, the probability of collecting and closing above the zone increases.
If that happens, the pair will complete an inverted head and shoulders pattern. The pair may rally to $7.6 and later to $8.30.
This bullish outlook may prove valuable in the near term if the price breaks down and closes below the 20-EMA. The pair may drop to a strong support at $5.50.
EOS/USD
EOS made the list because even in the midst of turmoil, it managed to stay above the moving averages. This indicates short-term underperformance and increases the possibility of a rally if sentiment in the cryptocurrency sector improves.
The EOS/USDT pair completed a rounded bottom pattern on August 21 but the bulls failed to sustain the highs. The bears have pulled prices back below their August 28 levels, indicating strong selling in rallies.
A slight positive is that the buyers are aggressively buying down the 50-day SMA ($1.33). The 20-day EMA ($1.48) is stretched and the RSI is near the midpoint, indicating a balance between buyers and sellers.
This balance could tip the bulls in favor if they push the price above $1.60 and hold them. The pair could rally to profit resistance near $2. Alternatively, a break and close below the 50-day SMA could open the door to a fall to $1.15.
The bears sold the rebound to $1.60 and are trying to pull the price below the $1.46 breakout level. If they do, the pair may fall to the top line. This level has served as strong support on the previous three occasions, so the bulls will try to defend it again.
If the price recovers from the retracement line and breaks above $1.60, the pair may rally to $1.80 and later to $2. Conversely, a break and close below the high line suggests that the short-term uptrend may be over. The pair could drop to $1.24.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and business activity involves risk, you should do your own research when making a decision.