The S&P 500 Index (SPX) closed the week with a nominal loss of 0.29% but Bitcoin (BTC) is on track to end the week with a deeper cut of more than 5%. Weakness in Bitcoin sent several altcoins lower, indicating weakening sentiment.
One silver lining is Bitcoin's solid rebound on May 12. Several analysts anticipate that Bitcoin will begin a recovery, but monitoring the material indicators of the resources seemed cautious.
In a recent analysis, they said the lack of strong supply from whales at lower levels could be a worrying sign. They believe that the bullish outlook will be invalidated if Bitcoin sustains below the 200-week moving average.
In the coming days, progress on debt ceiling talks between congressional leaders and the White House is expected to take center stage. Uncertainty and the risks of a possible US default could keep the rally in equity markets in check, but it is difficult to predict how Bitcoin and altcoins will react to all the chaos.
Bitcoin has entered a corrective phase and most of the altcoins have fallen below their respective support levels. Only a handful of cryptocurrencies are looking positive on the charts. Let's analyze the chart of the top five cryptocurrencies that may appear in the short term.
Bitcoin Price Analysis
The long tail on the Bitcoin candle for May 12 shows that the bulls are aggressively buying the dips to the neckline of the inverse head and shoulders (H&S) pattern.
The buyers will try to push the price back into the triangle, but may face stiff resistance from the bears. The down-sloping 20-day exponential moving average ($27,959) and the RSI below 41 indicate that the bears have a slight advantage.
If the price turns down from the 20-day EMA, the bears will try to sink the BTC/USDT pair below $25,250 again. If they can pull it off, the selling may intensify and the pair could fall to $20,000.
On the upside, the bulls will have to clear the hurdle at the resistance line to regain control. Then the pair may retest the overhead resistance at $31,000.
After facing stiff resistance at the 20-20 EMA, the bulls have cleared the hurdle. This indicates that the bulls are trying to take control. The pair can rally to the 50 simple moving average first and then to $28,400.
Conversely, if the price falls sharply from the current level, it will suggest that the bears are trying to turn the support line of the triangle into resistance. The pair can then drop to the crucial support at $25,250.
Cardano Price Analysis
Cardano (ADA) the solid bounce off the uptrend line on May 11 suggests that lower levels continue to attract strong buying.
The bulls will try to resume the rally by pushing the price to the 20-day EMA ($0.38). This level can act as a minor barrier, but if the bulls break above it, the ADA/USDT pair could shoot towards the neckline 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 turns down from the 20 day EMA and falls to the uptrend line. Repeated testing of a support level at short intervals tends to weaken it. That may open the doors for a possible drop to $0.30.
The bulls pushed the price above the moving averages, indicating that the bears may be losing control. The 20-EMA has started to rise gradually and the RSI is in the positive zone, indicating that the bulls are making a comeback.
If the buyers break through the overhead resistance at $0.37, the pair could pick up momentum and rally to $0.40 and then $0.42. Conversely, if the price turns below $0.37, the pair can slide towards the uptrend line.
Cosmos Price Analysis
cosmos (ATOM) has recovered from the support of $10.20 on May 10, indicating that the bulls are buying the dips at this level.
The bears are trying to stop the relief rally at the 50-day SMA ($11.28), but the bulls have not 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 sellers to protect because a break above it will invalidate the bearish descending triangle pattern.
Critical support to watch on the downside is $10.20. If it breaks out, the descending triangle will complete and the pair can plummet to $8.50.
The 4-hour chart shows that the relief rally is facing selling at higher levels, but price action is forming a possible inverse H&S pattern that will complete on a breakout and close above $11.30. The pair can then start an upward move to $12 and then $12.50.
Alternatively, if the price turns down and breaks below the 50-SMA, it will suggest that the bears are in control. The pair may then fall towards the vital support at $10.20. A bounce off of this level could keep the pair within the limits of $11.30 and $10.20 for a while longer.
Related: 4 alarming charts for Bitcoin bulls as $27K becomes a formidable hurdle
Lido DAO Price Analysis
Lido Dao (LDO) recovered from the support of $1.60 and reached the overhead resistance at the 20-day EMA ($1.95).
The bears are trying to protect the 20 day EMA, but the bulls are not giving up. This suggests that buyers are waiting for the recovery to continue. If the bulls push the price above the 20-day EMA, the LDO/USDT pair could rally to the downtrend line. This level is likely to attract heavy selling from the bears.
If the buyers stop the next dip above the 20 day EMA, it will suggest a shift in sentiment from selling the rallies to buying the dips. The pair could then start a sustained recovery above the downtrend line.
On the downside, the bears will have to dig in and hold the price below $1.60 to signal a resumption of the downtrend.
The 4-hour chart shows that the bulls are trying to push the price above the overhead resistance at $1.98. If they succeed, 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 can reach $2.60.
Conversely, if the price turns down from the current level or $1.98 and breaks below the moving averages, it will suggest that the bears are active at higher levels. That may keep the pair stuck between $1.57 and $1.98 for some time.
Decision Price Analysis
Arbitrum (ARB) has been finding support near the psychologically important $1 level, indicating that the bulls are aggressively buying dips.
On the upside, the bears have been trying to stop the rally at $1.20, but a minor positive in favor of the bulls is that they have maintained the buying pressure. That increases the probability of a break above $1.20. If that happens, the ARB/USDT pair could rally to $1.40 and then $1.50.
This positive view will be invalidated in the short term if the price falls sharply from $1.20. That will 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 turn up and the RSI is in the positive territory, indicating that the selling pressure is easing. The 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 day EMA. That could take the pair to $1.05. A drop below $1 will signal the resumption of the downtrend.
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.
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