After falling for eight consecutive weeks, the Dow Jones Industrial Average rebounded strongly last week to end upper by 6.2%. However,...
After falling for eight consecutive weeks, the Dow Jones Industrial Average rebounded strongly last week to end upper by 6.2%. However, Bitcoin (BTC) has was not able to reproduce the performance US stock markets and threatens to paint a red candle for the ninth week in a row.
A positive sign is that Bitcoin whales have bought the market correction. Data from Glassnode shows that the number of Bitcoin whales wallets with a balance of 10,000 Bitcoin or more hit its highest level since February 2021. The accumulation in whale wallets suggests that their long-term view for Bitcoin remains optimistic.
Blockware Solutions pointed out that the Mayer Multiple metric that compares the 200-day simple moving average with the current price was languishing “near some of the lowest readings on record.” The company said a few other indicators also suggest that Bitcoin tries to form a bottom.
If Bitcoin begins a short-term recovery, some altcoins may follow it higher. Let’s study the charts of the top 5 cryptocurrencies that are likely to lead the relief rally.
BTC/USDT
Bitcoin remains stuck in a tight range between the downtrend line and support at $28,630. The bears pulled the price below $28,630 on May 26-27, but were unable to 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 ($30,538). If successful, the BTC/USDT pair could gain momentum and the rally could hit the 50-day SMA ($35,181).
The positive divergence on the Relative Strength Index (RSI) suggests that the bearish momentum may be weakening and a rally may be imminent.
On the other hand, if the price turns lower from the overhead resistance, the bears will again try to pull the pair below $28,630. If they succeed, the pair will complete a bearish descending triangle pattern, which has a target objective of $24,601.
The 20-EMA and 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 the bulls push the price above the downtrend line, the negative descending triangle pattern will be undone. This could result in a short squeeze as short-term bears could close their positions. This could pave the way for an eventual rally towards the 200-SMA.
Conversely, the bears will prevail if the price declines and breaks below $28,630. This could lead to a retest of the crucial support at $26,700.
ETH/USDT
Ethereum (ETH) has been in a downtrend, but the bulls are trying to stem the decline at the crucial $1,700 support. The price bounced off this support on May 28th and the bulls are trying to take advantage of the rally on May 29th.
The RSI is forming a bullish divergence, indicating that the downtrend may be weakening. If the bulls push the price above the 20-day EMA ($2,036), the ETH/USDT pair could reach the broad resistance at $2,159. The bears are expected to defend this level aggressively. If the price drops from this resistance, the pair may stay in the range between $2,159 and $1,700 for a few days.
On the other hand, if the price declines from the current level or the 20-day EMA, the bears will again attempt to sink the pair below $1,700. If successful, the pair could resume its downtrend with the next major support at $1,300.
The rebound from the $1,700 support hit the 20-EMA where the bears can mount a strong defense. If the price declines from this level, it could improve the outlook for a break below $1,700. If this happens, the downtrend could resume.
Conversely, if the bulls push the price above the 20-EMA, the pair can reach the 50-SMA. This level may again act as resistance, but if the bulls break through this hurdle, 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 were unable to sustain the rally. The price fell back below the 20-day EMA on May 26.
The 20-day EMA is flattening and the RSI is above 46, suggesting selling pressure is easing. If the bulls push the price above the 20-day EMA, the XTZ/USDT pair could rally towards the 50-day SMA ($2.45). If this resistance also breaks, the buyers will attempt to push the price above the uptrend line.
On the other hand, if the price declines from the current level, it will suggest that the bears continue to defend the 20-day EMA. Sellers will then attempt to drop the pair below $1.75, which could open the doors for a drop to $1.64.
The 4-hour chart shows that the rally has been rejected from the 200-SMA, but the pair has bounced off the uptrend line. The bulls have pushed the price above the 50-SMA and will now attempt to breach the overhead hurdle at the 200-SMA. If they succeed, it will suggest the start of a short-term upward move.
Alternatively, if the price declines from the current level or the 200-SMA, the pair may drop to the uptrend line. A breakout and close below this support could send the price down to $1.61.
Related: Bitcoin will set a new record of 9 straight losing weeks with BTC price down 22% in May
KCS/USDT
KuCoin Token (KCS) broke above the 20-day EMA ($15.61) on May 20, but the bulls were unable to push the price above the 50-day EMA ($17.19). This may have tempted short-term traders to book profits, which pushed the price back below the 20-day EMA on May 26.
The bears were unable to leverage their edge and hold the price below the 20-day EMA, indicating strong buying by the bulls at lower levels. The buyers pushed the price back above the 20-day EMA on May 29.
If the bulls hold the price above the 20-day EMA, the possibility of a break above the 50-day SMA increases. If that happens, the KCS/USDT pair could rally to $18.44 and later to the 200-day SMA ($19.63).
Contrary to this assumption, if the price declines from the current level, it will suggest that traders are selling on rallies. A break and close below $14.92 could open the doors for further decline to $12.90.
The pair faced strong resistance at the 200-SMA, but the weak correction indicates that the bulls are buying on minor dips. If the bulls push the price above the 200-SMA, the next stop could be $17.14. A breakout and close above this level could trigger the next leg of the upward move.
Conversely, if the price turns lower from the overhead resistance, the bears can drive the pair down to the 38.2% Fibonacci retracement level at $14.20 and then to the 50% retracement level at $13.30 . This area is likely to act as a strong support.
AAVE/USDT
AAV rallied to the 20-day EMA ($101) on May 23, but the bulls were unable to push the price above. This suggests that the bears continue to defend the level aggressively, but a small silver lining is that the buyers haven’t given much ground.
If the price rises and breaks above the 20-day EMA, this will signal the start of a stronger relief rally. The AAVE/USDT pair could then rally to the 50-day SMA ($132) where the bears could once again mount a strong defense.
Alternatively, if the price declines from the current level or the 20-day EMA and falls below $89, short-term bulls who may have been buying at lower levels could close their positions. This could bring the price down to $79 and later to $64.
The 4-hour chart shows that the pair has been hovering between $90 and $110 for some time. The 20-EMA and 50-SMA are flat and the RSI is just above the midpoint, suggesting a balance between supply and demand.
This balance could tip in favor of the buyers if they push and hold the price above $110. If they do, the pair could rally towards $130 and then $143. Conversely, if the price drops below $90, the bears will take over. The pair could then drop 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, you should conduct your own research when making a decision.
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