The S&P 500 and Nasdaq have both fallen for five consecutive weeks, indicating that traders continue to reduce exposure to risky assets. The close correlation of Bitcoin (BTC) with the US stock markets has resulted in its price remaining under pressure.
Bitcoin has extended its decline over the weekend and is now on track for its sixth consecutive weekly loss, the first of its kind since 2014. Bitcoin’s weakness has brought down all crypto markets, whose market capitalization has fallen below the 1.6 trillion dollars.
When sentiment is bearish, traders sell every negative piece of news. The decoupling of the U.S. dollar stablecoin TerraUSD (UST) from Terra also appears to be increasing selling pressure across the cryptocurrency market.
After Bitcoin’s six consecutive weekly closes in the red, is it time for a recovery? Let’s study the charts of the top 5 cryptocurrencies that are showing signs of stabilization in the short term.
USDT/BTC
Bitcoin turned down from the 20-day exponential moving average (EMA) of $38,268 on May 5 and broke below the support line of the ascending channel. This move also invalidated the positive divergence in the Relative Strength Index (RSI).
The moving averages have started to turn down and the RSI is approaching the oversold zone, which indicates that the bears are in control.
The BTC/Tether (USDT) pair has minor support at $34,322, but if the bulls fail to defend this level, the drop could extend to $32,917. This is a crucial level to watch because if it breaks, the pair it could witness a panic selling and the next stop could be $28,805.
If the price turns up from $34.322, the recovery could face selling near the 20-day EMA. If the price turns down from this level, it will suggest that sentiment remains negative and traders are selling on rallies. That could improve the prospects for a resumption of the downtrend.
This negative view could be invalidated in the short term if the bulls push and sustain the price above the 20-day EMA. If that happens, the pair could rally to the 50-day simple moving average (SMA) of $41.466.
The downsloping moving averages indicate that the bears are in command, but the oversold levels on the RSI suggest that a relief rally or consolidation is possible in the near term. If the recovery fails to break above the 20-day EMA, the bears can keep selling pressure and the pair could drop to $32,917.
Conversely, a breakout and close above the 20-day EMA could signal the start of a strong relief rally. The pair could then rally to the 50-SMA. The buyers will have to push and hold the price above $40,000 to signal that the downtrend may be over.
ALGO/USDT
Algorand (ALGO) has been trading inside a descending channel pattern for the past few days. The price bounced off the support line of the channel on May 1 and the bulls broke through the hurdle at the 20-day EMA of $0.69, indicating that the selling pressure might be easing.
If the buyers sustain the price above the 50-day SMA of $0.76, the ALGO/USDT pair could rally to the resistance line of the channel. This is an important level for the bulls to break out of. If they manage to do that, it will suggest the start of a new move up. The pair could first rise to $1.10 and then to $1.25.
On the other hand, if the price breaks below the resistance line, it will suggest that the pair may extend its stay within the channel for a few more days. The bears will have to sink and hold the price below the channel to signal a resumption of the downtrend.
The 20-EMA has turned up and the RSI is in the positive territory, which indicates an upside for the buyers. There is a minor resistance at $0.80 and if the bulls break through this hurdle, the pair could rally to the resistance line of the channel.
On the downside, the 20-EMA is the critical level to watch. If the price bounces off this level, it will suggest that the sentiment has turned in favor of the buyers. That could increase the probability of a break above $0.80. Alternatively, if the price drops below the 20-EMA, the next stop could be the 50-SMA.
USDT/XMR
Monero (XMR) has been finding support close to the psychological support at $200 for the past few days. The buyers have not allowed the price to drop below the downtrend line, which suggests that they are trying to turn the level into support.
The bulls will have to push and sustain the price above the 20-day EMA of $223 to suggest that the corrective phase may be over. There is minor resistance at $240, but if the bulls break through this hurdle, the XMR/USDT pair could rally to $289.
Conversely, if the price turns down from the current level or the 20-day EMA, it will suggest that the bears have not given up yet. That could increase the probability of a break below $200. If that happens, the selling could intensify and the pair could drop to $150.
The pair has formed a symmetrical triangle pattern that suggests indecision between the bulls and the bears. If the bulls push the price above the resistance line of the triangle, it will suggest that the downtrend might be over. The pair could then rally to the 200-SMA and then rally towards the pattern target at $252.
Conversely, if the uncertainty of the triangle resolves to the downside, it will suggest that the triangle has acted as a continuation pattern. That could indicate the resumption of the downward movement. The pattern target on the downside is $164.
Related: LUNA Drops 20% in One Day as Whale Dumps Terra’s UST Stablecoin: Liquidation Risk Ahead?
MXN/USDT
Tezos (XTZ) broke below the long-term uptrend line on April 29 and the bears successfully defended the breakout level on May 5. The bears tried to start the downtrend but are struggling to hold the lower levels.
If the bulls push and hold the price above the uptrend line, it will suggest that the markets have rejected the breakout. The XTZ/USDT pair can then attempt a rally to the upper zone between the 50-day SMA of $3.18 and $3.40.
This positive view could be invalidated if the price turns back down from the uptrend line. If that happens, it will suggest that the bears have turned the uptrend line into resistance. A breakout and close below $2.39 could start a new downtrend that could reach $2.00.
The 20 EMA has flattened out and the RSI has formed a bullish divergence on the 4-hour chart, which suggests that the negative momentum is weakening. The pair could now attempt a rally to $2.90, where the bears may offer stiff resistance. A breakout and close above this level could open the doors for a possible move higher to $3.00 and then $3.30.
Alternatively, if the price turns down from the current level or overhead resistance, it will suggest that the bears are selling the rallies. That could keep the pair in a range between $2.90 and $2.39. The downtrend could accelerate if the bears sink the price below $2.39.
THETA/USDT
Theta Network (THETA) had been trading between $2.27 and $4.40 for the past few weeks. This range resolved lower on May 6, indicating that the bears had the upper hand.
Although the 20-day EMA of $2.57 is falling, the RSI is attempting to form a bullish divergence, which indicates that the selling momentum is weakening. If the bulls push the price back above the breakout level of $2.27, it could trap several aggressive bears who may have initiated short positions on the break below the range.
The THETA/USDT pair could then rally to the 20-day EMA. This is an important level to watch because if the bulls break out of this barrier, the pair could rally to the 50-day SMA of $3.10.
This positive view could be invalidated if the price turns down from the current level or the breakout level at $2.27 and drops below $2.00.
The bulls are buying the dips near the psychological $2.00 level. If the buyers push the price above the downtrend line, it will suggest that the bears may be losing control. Afterwards, the pair could rally to the overhead resistance at $2.64. This level can once again act as a strong resistance, but if the buyers break through this hurdle, the upside momentum can pick up.
Contrary to this assumption, if the price turns down from the 20-day EMA or the downtrend line, it will suggest that the bears continue to sell on the rallies. That could increase the possibility of a break below $2.00 and a resumption of the downtrend.
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 do your own research when making a decision.
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