If BTC bounces off its key underlying support, ADA, ATOM, FIL and EOS could break out.
Last week’s fall in US stock markets extended the losing streak across the market to three straight weeks. The Nasdaq Composite fell six days in a row for the first time since 2019. The market’s negative reaction to the seemingly positive August jobs report suggests that traders are nervous about the Federal Reserve’s future actions and their impact on the economy.
Weakness in US stock markets sent Bitcoin (BTC) back below $20,000 on September 2, with the bears holding the price below that level over the weekend. This brought Bitcoin’s market dominance to just under 39% on September 4, the lowest level since June 2018, according to data from CoinMarketCap.
Daily view of cryptocurrency market data. Source: Coin360
Although sentiment remains negative and a bottom is difficult to name, investors who believe in the long-term prospects of cryptocurrencies could take the opportunity to gradually build positions at lower levels, rather than trying to bottom. However, investors may avoid chasing higher prices during a bear market rally and buy when the price drops to strong support levels.
If bitcoin rises, some altcoins may rise. Let’s examine the charts of the top 5 cryptocurrencies that look strong on the charts.
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Bitcoin has been trading in a tight range of $19,520 to $20,576 over the past few days, showing an equilibrium between buyers and sellers in the short term. Although the bulls are buying on dips, they have not been able to win back the selling at higher levels.
BTC/USDT daily chart. Source: Trading View
The declining 20-day exponential moving average (EMA) at $20,863 and the Relative Strength Index (RSI) in negative territory point to sellers in favor. If the bears take the price below $19,520, the BTC/Tether (USDT) pair could drop to a strong $18,910-$18,626 support zone.
This zone is likely to attract active buying from the bulls, as was the case in the previous two cases. The bears need to push the price below $17,622 to signal a resumption of the downtrend.
On the other hand, the buyers should push and hold the price above the 20-day EMA to show that the bears could lose their positions. The pair could then move up to the 50-day Simple Moving Average (SMA) of $22,271.
4-hour BTC/USDT chart. Source: Trading View
The price has rebounded from strong support around $19,520, but the bears are trying to stop the rally on the moving averages. This shows that the bears are selling on every small rally. If the bears take the price below $19,520, the pair could resume the next leg of the downtrend.
Contrary to this assumption, the pair could try to rise towards the resistance range at $20,576 if the bulls push the price above the moving averages. Buyers must overcome this hurdle to signal a possible trend reversal in the near future.
Cardano (ADA) is in consolidation but is trying to rise above the moving averages. This indicates demand at lower levels and increases the chances of a move up, which is the reason for choosing it.
Daily ADA/USDT chart. Source: Trading View
The 20-day EMA of $0.47 has flattened out and the RSI has bounced back into positive territory, indicating easing selling pressure. If buyers hold the price above the 50-day SMA of $0.50, the ADA/USDT could rise to a downtrend line.
This level could become strong resistance again, but if the bulls break this barrier, the pair could rise to $0.70.
This positive view may be invalidated in the short term if the price deviates from current levels and falls below the 20-day EMA. In this case, the pair could return to strong support at $0.40.
ADA/USDT, 4-hour chart. Source: Trading View
The 20-EMA is sloping up on the 4-hour chart and the RSI has moved into overbought territory. This indicates that the bulls are in c