Bitcoin (BTC) has recovered close to $44,000, indicating that the downtrend could be coming to an end. However, the price may not rally to the all-time high in a straight line. This means bulls are likely to face several hurdles in-between and the price action may remain volatile.
JPMorgan analysts said in a recent investor note that Bitcoin’s boom and bust cycles are hindering further institutional adoption. The analysts estimate that with volatility four times that of gold, Bitcoin’s fair value is about $38,000. If the volatility reduces to three times that of gold, their fair value estimate for Bitcoin rises to $50,000.
Daily cryptocurrency market performance. Source: Coin360
The Wells Fargo Investment Institute, the research division of Wells Fargo Wealth and Investment Management, in its report titled “Cryptocurrencies — Too early or too late?” said the crypto markets were still in the early days of adoption. The report added that “most of the opportunity lies before us, not behind us […]”.
Could Bitcoin and altcoins extend their relief rally or will profit-booking pull prices lower? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin broke above the 50-day simple moving average (SMA) ($42,659) on Feb. 7 and reached the overhead resistance at $45,456 on Feb. 8. This level proved to be a strong resistance and the price turned down from it.
BTC/USDT daily chart. Source: TradingView
The BTC/USDT pair formed a Doji candlestick pattern on Feb. 8, indicating indecision among the bulls and the bears. However, the upsloping 20-day exponential moving average (EMA) ($40,751) and the relative strength index (RSI) in the positive zone indicate that the path of least resistance is to the upside.
If bulls thrust the price above $45,456, the pair could rise to $48,000 and thereafter to the stiff overhead resistance at $52,088. Contrary to this assumption, if the price turns down from the current level and breaks below the 50-day SMA, the pair could drop to the 20-day EMA.
Ether (ETH) broke and closed above the resistance line of the channel on Feb. 7 which is an indication that the downtrend could be over. Although bears defended the 50-day SMA ($3,208) on Feb. 8, they have not been able to pull the price back into the channel.
ETH/USDT daily chart. Source: TradingView
This suggests that bulls are attempting to flip the resistance line of the channel to support. The buyers will once again try to drive the price above the 50-day SMA on Feb. 9. If they succeed, the ETH/USDT pair could start a new up-move.
There is a minor resistance at $3,400, but if this level is crossed the next stop could be $3,900. The rising 20-day EMA ($2,924) and the RSI in the positive territory indicate advantage to buyers.
This bullish view will invalidate in the short term if bears sink and sustain the pair below the 20-day EMA.
Binance Coin (BNB) turned down from the downtrend line on Feb. 18, indicating strong resistance from the bears. The price has dropped to the 20-day EMA ($409), which is an important support to keep an eye on.
BNB/USDT daily chart. Source: TradingView
If the price rises from the current level, the bulls will again attempt to push the BNB/USDT pair above the downtrend line of the channel and the 50-day SMA ($453). If they succeed, it will suggest that the downtrend could be over. The pair could then start its march to the psychological level at $500.
Alternatively, if the price breaks below the 20-day EMA, it will suggest that the trend remains negative and higher levels are attracting selling by the bears. The pair could then drop to $390 and later extend its slide to $357.40.
Ripple (XRP) surged and closed above the 50-day SMA ($0.75) on Feb. 7, which is the first indication that the downtrend could be over. Traders are booking profits near $0.91, which could result in a minor correction or consolidation.
XRP/USDT daily chart. Source: TradingView
The moving averages are on the verge of a bullish crossover and the RSI is in the overbought zone, indicating that the path of least resistance is to the upside. If the price turns up from the current level or rebounds off $0.75, the bulls will try to propel the XRP/USDT pair above $0.91.
If they succeed, the up-move could reach the psychological level at $1 where the bears may again pose a strong challenge. This positive view will invalidate if the price turns down and plummets below the moving averages.
The bulls tried to propel Cardano (ADA) above the 50-day SMA ($1.23) on Feb. 8 but the bears held their ground. This pulled the price back to the 20-day EMA ($1.14). The price is now stuck between the moving averages.
ADA/USDT daily chart. Source: TradingView
The RSI is just above the midpoint and the moving averages are flat, indicating a range-bound action in the short term. If buyers push and sustain the price above the 50-day SMA, the pair could rally to the resistance line.
This is the critical level to watch out for because a break and close above the channel will be the first sign that the downtrend could be over.
Conversely, if the price turns down from the current level and breaks below the 20-day EMA, the ADA/USDT pair could slide to $1.
Solana (SOL) broke and closed above the overhead resistance at $116 on Feb. 7, but the bulls could not extend the relief rally further. The bears pulled the price back below $116 on Feb. 8.
SOL/USDT daily chart. Source: TradingView
The buyers have not yet given up as they are trying to defend the 20-day EMA ($112). If the price rebounds off the current level, the bulls will attempt to push the SOL/USDT pair above $121.93. If they manage to do that, the pair could rally to the resistance line.
Conversely, if bears pull the price below the 20-day EMA, the pair could drop to the uptrend line. If this level also cracks, the pair could decline to $94. The flat 20-day EMA and the RSI below the midpoint, suggest a range-bound action in the near term.
The relief rally in Terra’s LUNA token hit a wall at the 20-day EMA ($58). This suggests that the sentiment remains negative and bears are selling on rallies to strong resistance levels.
LUNA/USDT daily chart. Source: TradingView
If the price breaks and sustains below $54.20, the LUNA/USDT pair could lose strength and gradually drop to the strong support at $43.44. Such a move will suggest that the current up-move was a relief rally in a strong downtrend.
Alternatively, if the price rebounds off $54.20, it will suggest that traders are not waiting for a deeper correction to buy. The bulls will then attempt to push the pair above the 20-day EMA. If they succeed, the pair could rise to the downtrend line of the channel.
Related: Bitcoin centers on $44K as BTC price MACD delivers long-awaited bull signal
Avalanche (AVAX) soared on Feb. 8 to reach the downtrend line but the long wick on the day’s candlestick shows that bears are defending the overhead resistance aggressively. The bulls regrouped quickly and are attempting to push the price above the 50-day SMA ($88).
AVAX/USDT daily chart. Source: TradingView
The RSI is nearing the 62 level from where it had turned down on Dec. 21 and before that on Nov. 30. If buyers push the RSI above this resistance, it will indicate advantage to buyers. A break and close above the downtrend line could signal a possible change in trend.
Contrary to this assumption, if the price turns down from the current level or the downtrend line, the AVAX/USDT pair could find support in the zone between the 20-day EMA ($77) and $75.50. The bears will have to sink the price below this zone to gain the upper hand.
Polkadot (DOT) tried to rise above the zone between $22.66 and the 50-day SMA ($24.05) on Feb. 8, but the bears were in no mood to relent. A minor positive is that the bulls have not allowed the price to break below the 20-day EMA ($21.06).
DOT/USDT daily chart. Source: TradingView
Both moving averages have flattened out and the RSI is close to the midpoint, indicating a balance between supply and demand. A break and close above the 50-day SMA could tilt the advantage in favor of the buyers.
The DOT/USDT pair could then rise to $28 where the bears may again pose a stiff challenge. Alternatively, a break and close below the 20-day EMA could signal that the pair may remain range-bound between $22.66 and $16.81 for a few days.
Dogecoin (DOGE) broke and closed above the 50-day SMA ($0.15) on Feb. 7 but the bulls could not build upon this advantage. The bears pulled the price back below the 50-day SMA on Feb. 8, indicating that they have not given up yet.
DOGE/USDT daily chart. Source: TradingView
The 20-day EMA ($0.15) is the important level to watch on the downside. If the price rebounds off this level, the possibility of a break above $0.17 increases. If that happens, the DOGE/USDT pair could rise to the stiff overhead resistance at $0.19.
The gradually upsloping 20-day EMA and the RSI in the positive territory indicate a slight advantage to buyers. This positive view will invalidate if the price turns down and breaks below the 20-day EMA. The pair could then drop to the strong support at $0.13.
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 conduct your own research when making a decision.
Market data is provided by HitBTC exchange.