The S&P 500 and Nasdaq have declined for five consecutive weeks, indicating that traders are continuing to hedge their exposure to riskier assets. Bitcoin (BTC)’s close relationship with the United States equity markets has resulted in its price remaining under pressure.
Bitcoin extended its decline over the weekend and is now on track for its sixth consecutive weekly loss, the first such event since 2014. Bitcoin’s weakness has dragged down entire crypto markets whose market capitalization has fallen below $1.6 trillion.
When the sentiment is bearish, traders tend to sell on every negative news. The D-peg of Tera’s US dollar stablecoin TeraUSD (UST) is also adding to the selling pressure in the crypto market.
After Bitcoin’s Six-Best Weekly Close, Is It Time for a Recovery? Let’s look at the chart of the top-5 cryptocurrencies that are showing signs of stabilization in the near term.
BTC/USDT
Bitcoin broke below the 20-day exponential moving average ($38,268) on May 5 and broke below the support line of the ascending channel. The move also invalidated the positive divergence on the Relative Strength Index (RSI).
The moving averages have started turning lower and the RSI is close to the oversold zone, which indicates that the bears are in control.
The BTC/USDT pair enjoys minor support at $34,322, but if the bulls fail to defend this level, the downside could extend to $32,917. This is an important level to watch as if it breaks down, the pair could see a panic sell-off and the next stop at $28,805.
If the price rises above $34,322, a recovery could face a selloff near the 20-day SMA. If the price breaks below this level, it would indicate that sentiment remains negative and traders are selling on rallies. This could increase the chances of a resumption of the downtrend.
This downside outlook could be invalidated in the near term if the bulls continue to push and maintain the price above the 20-day EMA. If this happens, the pair can move up to the 50-day simple moving average ($41,466).
Downsloping moving averages indicate that bears are in command but oversold levels on the RSI suggest a relief rally or consolidation is possible in the near term. If the recovery fails to rise above the 20-EMA, the bears can maintain selling pressure and the pair can fall to $32,917.
Conversely, a break and close above the 20-EMA could signal the start of a strong relief rally. The pair can then move up to the 50-SMA. Buyers will need to push and sustain the price above $40,000 to signal that the downtrend may be over.
algo/usdt
Algorand (ALGO) has been trading inside a descending channel pattern for the past few days. The price bounced off the support line of the channel on May 1 and the bulls have cleared the hurdle at the 20-day EMA ($0.69), indicating that selling pressure may be waning.
If buyers maintain price above the 50-day SMA ($0.76), the ALGO/USDT pair could rally against the resistance line of the channel. This is an important level for bulls. If they manage to do so, it would suggest the start of a new up-move. The pair can first rise to $1.10 and later to $1.25.
On the other hand, if the price breaks below the resistance line, this would suggest that the pair may extend its stay inside the channel for a few more days. The bears will need to dip and maintain the price below the channel to signal a resumption of the downtrend.
The 20-EMA has moved up and the RSI is in positive territory, which is indicating gains for buyers. There is minor resistance at $0.80 and if the bulls clear this barrier, the pair could rise to the resistance line of the channel.
On the downside, the 20-EMA is an important level to watch. If the price rebounds from this level, it would indicate that the sentiment has turned in favor of the buyers. This could increase the chances of a break above $0.80. Alternatively, if the price moves below the 20-EMA, the next stop could be the 50-SMA.
XMR/USDT
Monero (XMR) has been finding support near the psychological support at $200 for the past few days. Buyers have not allowed the price to break below the downtrend line, suggesting that they are attempting to convert the level into support.
Bulls will need to push and sustain the price above the 20-day EMA ($223) to suggest a corrective phase may be over. There is a minor resistance at $240, but if the bulls clear this barrier, the XMR/USDT pair is likely to rally to $289.
Conversely, if the price breaks below the current level or the 20-day EMA, it would indicate that the bears have not given up yet. This could increase the chances of a break below $200. If this happens, then selling can take place and the pair can drop to $150.
The pair has formed a symmetrical triangle pattern which suggests indecision between the bulls and the bears. If the bulls drive the price above the resistance line of the triangle, it would signal that the downtrend may be over. The pair can then rebound to the 200-SMA and later move towards the pattern target of $252.
Conversely, if the uncertainty of the triangle resolved downwards, it would suggest that the triangle acted as a continuation pattern. This may indicate a downward resumption. On the downside, the pattern target is $164.
related: LUNA Drops 20% in One Day as Whales Dump Terra’s UST Stablecoin – Risk of Further Selling?
XTZ/USDT
Tezos (XTZ) broke below a longer-term uptrend line on April 29 and the bears successfully defended the breakdown level on May 5. The bears tried to initiate a downtrend but are struggling to maintain the lower levels.
If the bulls push and maintain the price above the uptrend line, it would suggest that the markets have rejected a breakdown. The XTZ/USDT pair could then attempt a rally to the upper zone between the 50-day SMA ($3.18) and $3.40.
This positive outlook may be invalidated if the price once again falls below the uptrend line. If this happens, it would indicate that the bears have turned the uptrend line into resistance. A break and close below $2.39 could start a new downtrend that is likely to reach $2.
The 20-EMA has leveled off and the RSI has formed a bullish divergence pattern on the 4-hours chart to indicate that downside momentum is weakening. The pair could now attempt a rally to $2.90, where the bears could provide a strong resistance. A break and close above this level could open the doors for a potential up-move to $3 and a subsequent $3.30.
Alternatively, if the price breaks below the current level or upper resistance, it would suggest that the bears are selling on the rallies. This can keep the pair range-bound between $2.90 and $2.39. If the bears push the price below $2.39, the downtrend could accelerate.
theta/usdt
Theta Token from Theta Network has been trading between $2.27 and $4.40 for the past several weeks. This range resolved to a downside on May 6th, indicating that the bears had the upper hand.
Although the 20-day EMA ($2.57) is trending down, the RSI is attempting to form a bullish divergence, which shows that selling momentum is weakening. If the bulls push the price back above the $2.27 breakdown level, it could trap many aggressive bears who may have initiated short positions at the break below the range.
The THETA/USDT pair can then move up to the 20-day EMA. This is an important level to watch because if the bulls cross this barrier, the pair could rally to the 50-day SMA ($3.10).
This positive outlook could be invalidated if the price declines from the current levels or below the breakdown level of $2.27 and falls below $2.
The bulls are buying dips near the psychological level at $2. If buyers drive the price above the downtrend line, it would indicate that the bears are losing their grip. The pair could then rally to the upper resistance at $2.64. This level may again act as a strong resistance, but if buyers clear this hurdle, a bullish momentum may increase.
Contrary to this assumption, if the price breaks below the 20-EMA or the downtrend line, it would suggest that the bears will continue selling on the rallies. This could increase the chances of a break below $2 and a resumption of the downtrend.
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, so you should do your own research when making a decision.
