Bitcoin’s recovery could trigger buying of these 4 altcoins
The S&P 500 (SPX) closed the week with a nominal loss of 0.29%, but Bitcoin (BTC) is on target to end the week with a deeper cut of more than 5%. The weakness in Bitcoin pulled several altcoins lower, indicating weakened sentiment.
One silver lining is Bitcoin’s solid pullback on May 12. Several analysts expect Bitcoin to start a recovery, but monitoring resource material indicators sounded cautious.
In a recent analysis, they said the lack of a strong bid from the whales at lower levels could be a worrying sign. They believe that the bullish perspective will be invalidated if Bitcoin stays below the 200-week moving average.
Over the next few days, progress in debt ceiling talks between leaders from Congress and the White House is expected to take center stage. The uncertainty and risk of a potential US default could keep the stock market rally in check, but it’s hard to predict how Bitcoin and altcoins will react to all the chaos.
Bitcoin has started a corrective phase and most altcoins have broken below their respective support levels. Only a handful of cryptocurrencies look positive on the charts. Let’s analyze the chart of the top five cryptocurrencies that can emerge in the short term.
Bitcoin price analysis
The long tail of Bitcoin’s May 12 candlestick shows that the bulls are aggressively buying the dips to the neck of the inverse head and shoulders (H&S) pattern.
Buyers will try to push the price back into the triangle, but may face stiff resistance from the bears. The descending 20-day exponential moving average ($27,959) and the relative strength index (RSI) below 41 indicate that bears have a slight edge.
If the price breaks down from the 20-day EMA, the bears will again attempt to lower the BTC/USDT pair below $25,250. If they succeed, selling may intensify and the pair may crash to $20,000.
On the upside, the bulls must clear the hurdle at the resistance line to regain control. The pair may then retest the overhead resistance at $31,000.
After facing stiff resistance at the 20-EMA, the bulls have cleared the hurdle. This indicates that the bulls are trying to take control. The pair may first climb to the 50-simple moving average and then to $28,400.
On the contrary, if the price falls sharply from the current level, it will indicate that the bears are trying to turn the triangle support line into resistance. The pair can then dive to the crucial support at $25,250.
Cardano Price Analysis
Cardano’s (ADA) solid pullback from the May 11 uptrend line suggests that lower levels continue to attract strong buying.
The bulls will try to resume the recovery by driving the price to the 20-day EMA ($0.38). This level could act as a minor barrier, but if bulls overcome it, the ADA/USDT pair could soar towards the neck of the inverse H&S pattern. This level is likely to witness a tough battle between the bulls and the bears.
Another possibility is that the price breaks down from the 20-day EMA and falls to the uptrend line. The repeated retesting of a support level at short intervals tends to weaken it. That could open the doors for a potential drop to $0.30.
The bulls pushed the price above the moving averages, indicating that the bears may be losing their grip. The 20-EMA has started to turn up gradually and the RSI is in the positive zone, indicating that the bulls are on a comeback.
If buyers pierce the overhead resistance at $0.37, the pair could gain momentum and rise to $0.40 and later to $0.42. Conversely, if the price declines from $0.37, the pair may slide to the uptrend line.
Cosmos price analysis
Cosmos (ATOM) bounced back from the $10.20 support on May 10, indicating that the bulls are buying the dips to this level.
The bears are trying to stop the relief rally at the 50-day SMA ($11.28), but the bulls haven’t given up much ground. This improves the prospects for a rally above the 50-day SMA. If that happens, the ATOM/USDT pair could rally to the downtrend line.
This is an important level for the sellers to guard because a break above it will invalidate the bearish descending triangle pattern.
The critical support to watch on the downside is $10.20. If it breaks, the descending triangle will complete and the pair could then plunge to $8.50.
The 4-hour chart shows that the relief rally is facing selling at higher levels, but the price action is forming a possible inverse H&S pattern that will complete on a break and close above $11.30. The pair can then start an up move to $12 and then to $12.50.
Alternatively, if the price goes down and breaks below the 50-SMA, it would indicate that the bears are in control. The pair could then fall towards the vital support at $10.20. A pullback from this level could keep the pair within the $11.30 and $10.20 boundaries for a while longer.
Related: 4 Alarming Charts for Bitcoin Bulls as $27K Becomes a Formidable Obstacle
Lido DAO price analysis
Lido Dao (LDO) rebounded from the $1.60 support and has reached overhead resistance at the 20-day EMA ($1.95).
The bears are trying to protect the 20-day EMA, but the bulls have not given up. This suggests that buyers expect the rise to continue. If bulls drive the price above the 20-day EMA, the LDO/USDT pair could rally to the downtrend line. This level is likely to attract strong selling by the bears.
If buyers arrest the next decline above the 20-day EMA, it would suggest a change in sentiment from selling on the rally to buying on the dip. The pair can then start a sustained recovery above the downtrend line.
On the downside, the bears need to drop and sustain the price below $1.60 to indicate a resumption of the downtrend.
The 4-hour chart shows that the bulls are trying to drive the price above the overhead resistance at $1.98. If successful, the pair will complete a bullish double bottom pattern. This reversal setup has a target of $2.39. If this level is also crossed, the pair could reach $2.60.
Conversely, if the price breaks down from today’s level or $1.98 and breaks below the moving averages, it would indicate that bears are active at higher levels. That could keep the pair stuck between $1.57 and $1.98 for a while.
Arbitrum price analysis
Arbitrum (ARB) has found support near the psychologically important $1 level, indicating that the bulls are aggressively buying the dips.
On the upside, the bears have tried to stop the recovery at $1.20, but a minor positive in favor of the bulls is that they have kept up the buying pressure. That increases the likelihood of a break above $1.20. If that happens, the ARB/USDT pair could rise to $1.40 and later to $1.50.
This bullish view will be invalidated in the short term if the price declines sharply from $1.20. That would point to a possible consolidation between $1 and $1.20 for a few days.
The 20-EMA on the 4-hour chart has started to rally and the RSI is in the positive territory, indicating that selling pressure is easing. Buyers will try to strengthen their position by pushing the pair above $1.20. If they do, the pair will complete a double bottom pattern, which has a target of $1.35.
The first sign of strength for the bears will be a break and close below the 20-EMA. That could pull the pair to $1.05. A slide below $1 would signal the resumption of the downtrend.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making a decision.
