Bitcoin price consolidation has moved traders to these 4 altcoins
Bitcoin (BTC) has been trading in a tight range since Thanksgiving on November 24, as traders are uncertain about the next directional move. Usually, in a bear market, analysts tend to be uber-bearish and project targets that tend to scare away investors.
Bitcoin’s failure to start a strong recovery has given rise to several bearish targets, extending up to $6,000 on the downside.
While anything is possible in a bear market, traders who take a long-term view can try to accumulate fundamentally strong coins in multiple tranches. Because a bottom will only be confirmed in retrospect, and trying to time it is usually an exercise in futility.
In a bear market, not all coins fall at the same time. Therefore, along with keeping an eye on the broader cryptocurrency market, traders should pay close attention to the coins they choose.
The cryptocurrencies that lead the market out of the bear phase generally tend to do well when the next bull market begins. Let’s look at the charts of the cryptocurrencies that are trying to start a short-term rally.
BTC/USDT
Bitcoin has consolidated between $15,588 and $17,622 in recent days. The Relative Strength Index (RSI) has formed a bullish divergence, suggesting that selling pressure may be easing.
The relief rally may face stiff resistance in the zone between the 20-day exponential moving average ($17,065) and $17,622. If the price breaks down from the overhead zone, the BTC/USDT pair could extend its stay within the range for a while longer.
If buyers throw the price above the overhead zone, it will indicate that the downtrend may end. The 50-day simple moving average ($18,600) could act as a small obstacle, but if crossed, the up move could reach the psychological level of $20,000.
Alternatively, if the price breaks down from the overhead resistance and breaks below $15,588, it could signal resumption of the downtrend. The pair could then fall to $13,554.
The moving averages on the 4-hour chart have flattened and the RSI is near the midpoint, indicating a balance between supply and demand. This balance could tip in favor of the bulls if they push the price above $17,000. The pair could then rise to the overhead resistance at $17,622.
Instead, if the price falls below $16,000, the pair may fall to the critical support zone between $15,588 and $15,476. A break below this zone can accelerate selling and start the next leg of the downtrend.
DOGE/USDT
Dogecoin (DOGE) broke above the $0.09 overhead resistance on November 25th, but the bears pulled the price back below the November 26th level. Buyers regrouped and pushed the price above the 38.2% Fibonacci retracement level of $0.10 on November 27.
The bears may again try to stop the recovery near $0.10, but if bulls do not allow the price to go below $0.09, the DOGE/USDT pair may gain momentum and rally towards the 61.8% Fibonacci retracement level at $0.12. If this level also scales, the pair could continue its uptrend towards $0.16.
On the other hand, if the price goes down from today’s level, it would indicate that the bears continue to see the rallies as a selling opportunity. The pair could then fall to $0.09. If this support gives way, the 50-day SMA ($0.08) could be challenged.
Buyers have pushed the price above the range, suggesting the start of an up move. The strong rally pushed the RSI to deeply overbought levels, suggesting a minor correction or consolidation in the near term.
If the price breaks down from the 38.2% Fibonacci retracement at $0.10 but bounces back from the breakout level, it would indicate that sentiment has turned positive and traders are buying on the dip. The bulls will then try to resume the uptrend. The target for the breakout from the area is $0.12.
This positive view may be invalidated in the short term if the price declines and re-enters the range. The pair may then fall to the 50-SMA.
LTC/USDT
Litecoin’s (LTC) breakout above the $75 overhead resistance is the first indication of a potential trend change. The bears tried to pull the price back below $75 and catch the aggressive bulls, but the buyers held their ground.
The bulls will try to drive the price above the overhead resistance at $84. If they succeed, it could signal the start of a new uptrend. The rising 20-day EMA ($67) and RSI near the overbought zone indicate that the path of least resistance is up. The LTC/USDT pair could then rise towards the $104 target.
Conversely, if the price declines from $84, the pair may slide to the $73 to $75 support zone. If this zone breaks down, the pair may slide to the 20-day EMA. The bears must pull the price below this support to catch the aggressive bulls.
If the price pulls back from the 20-day EMA, the bulls will again try to kick the pair above $84 and start the uptrend.
The 4-hour chart shows that the price broke and closed below the 20-EMA, but the bears could not build on this advantage. The bulls bought this dip and pushed the price back above the 20-EMA. Both moving averages are sloping up and the RSI is just above the midpoint, indicating that buyers have a slight advantage.
There is a small resistance at $80, but if bulls push the price above this level, the pair could rise to $84. The pair can then try a rally to $96. If bears want to invalidate this view in the short term, they need to pull the pair below $73.
Related: My Bitcoin mining earnings in two years, hash rate on the decline
LINK/USDT
Chainlink (LINK) has been range bound between $5.50 and $9.50 for the past several weeks. The strong pullback from the $5.50 support on Nov. 21 suggests bulls are aggressively buying the dips to this level.
The 20-day EMA ($6.74) has started to emerge and the RSI has risen into the positive territory, indicating a minor advantage for the bulls. If the price holds above the 50-day SMA ($7.15), the probability of a rally to $8.50, and then to $9.50 increases.
Contrary to this assumption, if the price goes down and breaks below the 20-day EMA, it would suggest that bears are active at higher levels. The LINK/USDT pair could then again fall towards the $5.50 support and consolidate near it for a few more days.
The strong pullback from the $5.50 level is approaching overhead resistance at $7.50. If the price declines from this level and breaks below the 20-EMA, the pair may fall to the 50-SMA. A break below this support could keep the pair stuck between $5.50 and $7.50 for some time.
Another possibility is that the price goes down from $7.50 but retraces from the 20-EMA. The bulls will then again try to drive the price above $7.50 and start marching north towards $8.50.
APE/USDT
ApeCoin (APE) has been consolidating in a large range between $3 and $7.80 in recent months. The bears tried to lower the price below the support of the series, but were unable to sustain the lower levels. This suggests strong demand at lower levels.
Sustained buying pushed the price above the 20-day EMA ($3.47) on November 26, indicating that the bulls are on a comeback. There is a minor resistance at the 50-day SMA ($4.06), but if bulls clear this roadblock, the APE/USDT pair could rise to the downtrend line.
If the price breaks down from the downtrend line, the pair may fall to the 20-day EMA. If the pair pulls back from this level, it would indicate that sentiment has shifted from selling on the rally to buying on the dip. It could improve the prospects for a break above the downtrend line. The pair can then climb to $6.
On the contrary, if the price breaks down from the downtrend line and breaks below the 20-day EMA, the pair may again slide to the strong support at $3.
The moving averages on the 4-hour chart have started to turn up and the RSI has jumped into the overbought territory, indicating that bulls have a slight advantage. The rally may meet resistance at $4, but if bulls do not allow the price to fall below the moving averages, the rally may reach the downtrend line.
This bullish view could be invalidated in the short term if the price goes down and breaks below the 50-SMA. Such a move would suggest that bears are continuing to sell on the rally. The pair could then fall to $3.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade involves risk, you should do your own research when making a decision.
