After eight consecutive weeks of decline, the Dow Jones Industrial Average rebounded sharply last week to close with a gain of 6.2%. However, Bitcoin (BTC) has not been able to replicate the performance of the United States equity markets and is threatening to paint a red candle for the ninth week in a row.
A positive sign is that bitcoin whales are buying a market correction. Glassnode data shows that the number of bitcoin whale wallets with a balance of 10,000 bitcoins or more has reached its highest level since February 2021. Accumulation in Whale Wallet suggests that their long-term outlook for Bitcoin remains bullish.
Blockware Solutions highlighted that the Mayer Multiple metric that compares the 200-day simple moving average with the current price is “near some of the lowest readings on record.” The firm said that some other indicators also suggest that bitcoin is trying to form a bottom.
If bitcoin starts a recovery in the near term, some altcoins are likely to follow it higher. Let’s take a look at the chart of the top 5 cryptocurrencies that could lead the relief rally.
BTC/USDT
Bitcoin is stuck within a tight range between the downtrend line and the $28,630 support. 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 28 May.
The bulls will now attempt to push the price above the descending trend line and challenge the 20-day exponential moving average ($30,538). If they succeed, the BTC/USDT pair could pick up momentum and a rally could reach the 50-day EMA ($35,181).
Positive divergence on the Relative Strength Index (RSI) suggests that bearish momentum may be weakening and a rally may be around the corner.
On the other hand, if the price falls below the upper resistance, the bears will again attempt to pull the pair below $28,630. If they manage to do so, the pair will complete a bearish descending triangle pattern with a target target of $24,601.
The 20-EMA and 50-SMA have leveled off on the 4-hours chart and the RSI is just above the midpoint, which suggests a balance between supply and demand.
If the bulls drive the price above the downtrend line, the negative descending triangle pattern will be negated. This can result in short term as short term bearers can close their positions. This may clear the way for a possible rally up to the 200-SMA.
Conversely, if the price declines and falls below $28,630, the bears will top. This could result in a retest of the crucial support at $26,700.
ETH/USDT
Ethereum (ETH) has been in a downtrend but the bulls are trying to stop a decline at the crucial support level of $1,700. The price bounced back from 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, which indicates that the downtrend could be weakening. If the bulls push the price above the 20-days EMA ($2,036), the ETH/USDT pair is likely to rise to upper resistance at $2,159. The bears are expected to defend this level aggressively. If the price breaks below this resistance level, the pair may remain in the range between $2,159 and $1,700 for a few days.
On the other hand, if the price breaks below the current level or the 20-day EMA, the bears will again attempt to pull the pair below $1,700. If they succeed, the pair may resume its downtrend with the next major support at $1,300.
There is a bounce from the $1,700 support to the 20-EMA, where the bears can create a strong defense. If the price declines from this level, it could increase the chances of a break below $1,700. If that happens, the decline could start all over again.
Conversely, if the bulls push the price above the 20-EMA, the pair could move towards the 50-SMA. This level could again act as a resistance, but if the bulls clear this barrier, the pair could rally to the psychological resistance at $2,000.
XTZ/USDT
Tezos (XTZ) is consolidating in a downtrend. Although the bulls pushed the price above the 20-day EMA ($2) on May 24, they could not sustain the recovery. The price broke below the 20-day EMA on May 26.
The 20-day EMA is flattening out and the RSI is above 46, which indicates that selling pressure is waning. If the bulls push the price above the 20-day SMA, the XTZ/USDT pair could rally towards the 50-day SMA ($2.45). If this resistance also gives way, buyers will attempt to push the price above the uptrend line.
Conversely, if the price breaks below the current level, it would suggest that the bears will continue to defend the 20-day EMA. Then sellers will attempt to sink the pair below $1.75 which could open the door for a fall to $1.64.
The 4-hour chart shows that the recovery has fallen below 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 upper hurdle at the 200-SMA. If they manage to do so, it would suggest the start of a short-term up-move.
Alternatively, if the price breaks below the current level or the 200-SMA, the pair could decline to the uptrend line. A further close below this support could lead the price to $1.61.
related: Bitcoin Sets a New 9-Week Loss Record in May as BTC Price Dropped 22%
kcs/usdt
KuCoin Token (KCS) broke above the 20-day EMA ($15.61) on May 20, but the bulls could not push the price above the 50-day SMA ($17.19). This may have tempted short-term traders to book profits, which pulled the price below the 20-day EMA on May 26.
The bears could not build on their gains and kept the price below the 20-day EMA, which indicates strong buying by the bulls at lower levels. Buyers pushed the price above the 20-day EMA on May 29.
If the bulls maintain the price above the 20-day SMA, the chances of a breakout above the 50-day SMA increase. If this happens, the KCS/USDT pair is likely to rebound to $18.44 and later to the 200-day SMA ($19.63).
Contrary to this assumption, if the price breaks below current levels, it would suggest that traders are selling on rallies. A further close below $14.92 could lead to a further decline towards $12.90.
The pair is facing strong resistance at the 200-SMA, but a shallow correction indicates that the bulls are buying on a slight downside. If the bulls push the price above the 200-SMA, the next stop could be at $17.14. A break above this level and close up could initiate the next phase of the move.
Conversely, if the price breaks below the upper resistance, the bears are likely to pull the pair down to the 38.2% Fibonacci retracement level of $14.20 and then the 50% retracement level of $13.30. This area is likely to act as a strong support.
AAVE/USDT
AAVE reached the 20-day EMA ($101) on May 23, but the bulls could not push the price above it. This suggests that the bears continue to aggressively defend the level but a slight positive is that buyers have not given up much ground.
If the price moves above and breaks the 20-day EMA, it would signal the start of a strong relief rally. The AAVE/USDT pair can then rebound to the 50-day SMA ($132), where the bears can again establish a strong defense.
Alternatively, short-term bulls buying lower levels could close their positions if the price breaks below the current level or the 20-day EMA and breaks below $89. This could drag the price down to $79 and later to $64.
The 4-hour chart shows that the pair has been fluctuating for some time between $90 and $110. The 20-EMA and 50-SMA are flat and the RSI is just above the midpoint, which suggests a balance between supply and demand.
This balance may tilt in favor of the buyers if they continue and sustain the price above $110. If they do, the pair can rebound to $130 and then to $143. Conversely, if the price falls below $90, the bears will gain an edge. The pair can drop again to $80 and later to $70.
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.
