After a nearly 20% rally last week, Bitcoin (BTC) is on track to end this week with gains of about 10%. Bitcoin's rally has improved sentiment and has attracted buying in several altcoins. This sent the total crypto market capitalization firmly above the $1 trillion mark.
Bitcoin's strong recovery has surprised several analysts who are skeptical of the rally. Some believe that the the current rise is a dead cat bounce that will change direction sharply while others see similarities between the current rally and the 2018 Bear Market Recovery.
Although traders should be prepared for any eventuality, Bitcoin's rate of rise points to a potential major bottom. There are likely to be bumps in the road, but traders are likely to aggressively buy dips.
The sustained recovery of Bitcoin may encourage the purchase of selected altcoins.
Let's study the Bitcoin charts and select altcoins that are showing strength in the short term.
USDT/BTC
Bitcoin broke above the overhead resistance of $21,650 on Jan 20, signaling the resumption of the upward move. This shows that demand is still strong at higher levels.
The bulls pushed the price above the $22,800 resistance on Jan. 21 but failed to take advantage of the breakout as seen from the long wick on the day's candle.
While the rising moving averages indicate that the bulls are in command, the RSI in overbought territory warrants caution. It suggests that a few days of consolidation or minor correction are possible.
However, when a new uptrend starts, the RSI sometimes tends to stay in the overbought zone and frustrates the bears. If that happens, the uptrend can continue without a major pullback and the pair could reach $25,211.
On the downside, the first support is at $21,480. If the price bounces off this level, it will suggest that the bulls are buying every minor dip. That could increase the probability of a rally to $25,211.
The 4-hour chart shows that the bulls are trying to turn the $22,800 level into support. If the price continues higher and rises above $23,271, the bullish momentum could pick up and the pair could accelerate towards $25,211.
If the price turns down and falls below $22,600, the pair could slide to the 20 exponential moving average. This level can act as support, but if the bears manage to push the price down, the next stop could be at $21,480.
APE/USDT
ApeCoin (BUN) has been range bound between $7.80 and $3 for the past few months. After the bears failed to sink the price below the range, the bulls are trying to come back. They will try to push the price to the resistance of the range.
The rising moving averages and the RSI in the overbought area suggest that the buyers have the upper hand. There is minor resistance near $6.40, but if buyers break through it, the APE/USDT pair could rally to $7.80. This level may witness aggressive selling by the bears.
The positive view could be invalidated in the short term if the price turns down and breaks below the 20-day EMA ($4.80). That could sink the price to the 50-day simple moving average ($4.17).
The 4-hour chart shows that the pair is in a strong uptrend. The bears are trying to stop the move higher at $6, but a positive sign is that the bulls have not given up much ground. This indicates that every minor dip is being purchased. The bulls will now try to push the price above $6 and resume the uptrend.
Rather, the bears will try to push the price below the 20 day EMA. If successful, the pair could attract profit booking from short-term bulls. The pair could then drop to $5.
MANA/USDT
Decentralized (MANNA) rose sharply from $0.28 on Dec. 30 to $0.78 on Jan. 21, showing strong momentum in favor of the bulls.
The bears sold the break above $0.74 on Jan. 17, but the bulls stepped in and bought the dip to $0.61. This shows that sentiment remains positive and traders view dips as a buying opportunity.
The bulls will have to hold the price above $0.74 to signal the start of the next leg of the rally. The MANA/USDT pair could rally to $0.87 and then the psychological barrier of $1.
If the bears want to gain an advantage, they will have to push the price below $0.61. If they do that, the pair could start a deeper correction to $0.53.
The 4-hour chart shows the formation of an inverse head and shoulders pattern. If the buyers push the price above the neckline of the pattern, the setup will be complete and the pair could move towards the $0.93 target.
Conversely, if the price turns down from the current level and breaks below the moving averages, it will suggest that the bears are fiercely protecting the resistance at $0.74. Then the pair could drop to the $0.61 to $0.55 support zone.
Related: Terra Mars loan protocol to launch mainnet
AAVE/USDT
Ghost (GHOST) broke out and closed above the downtrend line on January 17, indicating a possible trend reversal. The bears tried to pull the price below the downtrend line on January 18, but the bulls held their ground.
The rising 20-day EMA ($74) and the RSI in the overbought region suggest that the bulls have the upper hand. This advantage could strengthen further on a break above $92. The AAVE/USDT pair could rally to the psychologically crucial $100 level.
This level may once again present a strong challenge for buyers, but if this hurdle is cleared, the pair could shoot towards $115.
Contrary to this assumption, if the price turns down and dips below the downtrend line, it will indicate that the bears are active at higher levels. The advantage may tilt in favor of the bears on a drop below the 20 day EMA.
The 4-hour chart shows that the bears are defending the $88-$91 zone but have not been able to push the price below the moving averages. This indicates bullish sentiment where traders are buying the dips.
The bulls will make one more attempt to clear the area above. If they can pull it off, the pair could resume the uptrend.
Instead, if the bulls fail to push the price above $91, the bears will try to push the pair below the moving averages. Then the pair could fall to $78 and then to $73.
FILE/USDT
file currency (FIL) broke above the downtrend line on January 14 and retested the breakout level on January 18. This suggests that the bulls have turned the downtrend line into support.
The moving averages have completed a bullish crossover and the RSI is in the overbought space, indicating that the bulls are in control. The FIL/USDT pair could rally to $6.50 where the bears can mount strong defense again. If the bulls push the price above this level, the move higher could reach $9 with a short stop near $7.
The 20-day EMA ($4.24) is the important support to watch on the downside because a dip below could tip the advantage in favor of the bears.
The bears tried to stop the relief rally at $5 but the bulls broke through this resistance and started the next leg of the rally. The rising moving averages and the RSI in the overbought zone indicate that the bulls are firmly in the driver's seat. The buyers will try to push the pair towards $6.50 and then towards $7.
On the downside, the 20-EMA is the critical support to watch out for. If the price bounces off this level, it will indicate that the uptrend remains intact. On the other hand, if the bears drag the price below the moving averages, the pair could crash to $4.20.
The views, thoughts and opinions expressed here are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
Post navigation
Previous Post
The Week in Business: The Debt Limit and Politics
