Sentiment plays an important role in the short-term dynamics of an asset’s price. This fact came to light today when Elon Musk, the richest man in the world, wrote the word “Bitcoin” in his biography on Twitter. Cryptocurrency traders and Musk supporters immediately noticed this, and bitcoin quickly spiked a few minutes after the tweet.
When the BTC price takes a sharp directional move, traders buy on the breakout and the card sellers get kicked out of their positions. This appears to be exactly what happened to Bitcoin (BTC) when the sentiment quickly turned bullish.
Bitcoin wasn’t the only one experiencing this rally. There have been rumors that Reddit users, who were recently responsible for the price increase on GameStop, debated whether the price of Dogecoin (DOGE) could be raised to $ 1. This led to a big jump in the price of Dogecoin.
Acting excessively greedy and passionate can be risky. While professional traders can make money under these volatile conditions, an ambitious retailer is usually stuck at higher levels and has to take heavy losses. Therefore, traders need to restrain their greed and stick to a trading strategy.
In an unstable environment, price action and trends can change rapidly. Let’s analyze the charts of the top 10 cryptocurrencies to determine the support and resistance levels that can be useful in making trading decisions.
Bitcoin / USD
On January 27, Bitcoin maintained its 50-day simple moving average ($ 30,065), and on January 28, buyers actively bought it, pushing the price towards the 20-day exponential moving average ($ 33,555).
The buying continues today, with the bulls pushing the price above the falling line. This move nullifies the short-term bearish outlook for the Bitcoin / USD pair.
There is little resistance at $ 38,000, but if this level is broken, the rally could continue to $ 40,000 and then to $ 41,959.63. The current rally may ever be a strong resistance, but if the momentum can push the price above it, the journey towards $ 50,000 could start.
Contrary to this assumption, the bulls are more likely to protect the 20 day moving average if the price moves away from the upper resistance. If they succeed, it means that traders will buy into the downturn. The bulls will then try to resume the trend again.
The trend will turn in favor of the bears if the pair dips and falls below the critical support level of $ 28,850.
ETH / USD
Ether (ETH) bounced off the 20-day moving average ($ 1234) on January 28, indicating that the bulls are aggressively buying every smaller drop and not waiting for a deeper correction to enter long positions.
Today, the bulls pushed the price above the $ 1400 upper resistance level, but are currently trying to maintain higher levels. If they manage to keep the price above $ 1,400, a fresh test could be taken at the high of $ 1,473,096.
A break to a new full-time high will open the door for further growth to $ 1675 and then to $ 2000. The higher moving averages indicate a bulls advantage, but the negative RSI divergence indicates weak momentum.
If the bears can move down and keep the ETH / USD pair below the uptrend line, this would indicate weakness.
DOT / USD
The strong return to Polkadot (DOT) of $ 14.7259 support on Jan 28 shows that the bulls are buying aggressively on dips to this level. Altcoin can now extend their stay from $ 14.7259 to $ 19.40 for a few more days.
A shallow correction after a strong rally and consolidation near the upper resistance are signs of strength. This shows that traders are not in a hurry to make a profit, as they expect the trend to resume.
If the bulls are able to push the price above $ 19.40, the next stage of the trend might start. First goal is $ 24, then $ 27. The bullish moving averages and the RSI above 60 indicate that everything is under the bull’s control.
This bullish outlook will be over if the price reverses from the current level and falls below the support level of $ 14.7259. The move signals that traders are strongly taking profits, which could lead to a drop to the 61.8% retracement level at $ 11.8383.