Bitcoin (BTC) surged to the 200-week moving average on July 8, a level that could serve as a battleground between bulls and bears. Many analysts are watching this level because a breakout and a close above it could be the first sign that the bear market may be over.
Mike McGlone, chief commodity strategist at Bloomberg, said that Bitcoin’s 50-week and 100-week moving averages are showing similar signals as they did before the bottom of the 2018 bear market. Therefore, McGlone expects Bitcoin to give a strong recovery in the second half of 2022.
Daily cryptocurrency market performance. Source: Coin360
Another positive sign is that Bitcoin surged above $22,000 on July 8 even as the US Dollar Index (DXY) continued its march north. This indicates that the strong inverse correlation between Bitcoin and DXY may begin to weaken.
Could Bitcoin Extend Its Recovery Leading Crypto Market Rally? Let’s study the charts of the top 10 cryptocurrencies to find out.
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BTC / USDT
Bitcoin broke above the resistance line of the symmetrical triangle and the 20-day exponential moving average ($21,233) on July 7, signaling the return of the bulls.
BTC/USDT daily chart. Source: TradingView
The 20-day stable EMA and the Relative Strength Index (RSI) just below its mid-point indicate that selling pressure may be declining.
If the price bounces off the current level or the breakout level of the triangle, this will indicate that sentiment has turned positive and traders are buying the dips. This could increase the potential for a rally to the 50-day simple moving average (SMA) ($25,015) and then to the pattern target at $26,490.
This positive short-term outlook may be nullified if the price breaks below the 20-day moving average and returns to the triangle. This will indicate strong selling by the bears at higher levels. After that, the pair may drop to the triangle support line.
ETH / USDT
Ether (ETH) broke above the 20-day moving average ($1,198) on July 7 and reached the upper resistance at $1,280 on July 8. Bears are aggressively defending this resistance and trying to sink the price back below the 20 day EMA.
ETH/USDT daily chart. Source: TradingView
If they do, ETH/USDT could drop to the support line of the ascending triangle. This is an important level to watch as a breakout and closing below it could invalidate the bullish setup. This could pull the price lower towards the critical support at $881.
On the contrary, if the price bounces off the 20 day EMA and breaks above $1280, it will complete the ascending ascending triangle pattern. The pair could then rise to the 50-day simple moving average ($1,470) and later rise to the pattern’s target at $1,679.
BNB / USDT
BNB broke and closed above the 20-day moving average ($233) on July 6, but the bulls are struggling to push the price up to the 50-day simple moving average ($262). This indicates that the bears are active at higher levels.
BNB/USDT daily chart. Source: TradingView
Sellers are trying to pull the price below the 20 day moving average. If they can pull it off, the BNB/USDT pair may slide to the strong support level at $211.
On the other hand, if the price bounces off the 20 day EMA, it will indicate that sentiment is turning positive and the bulls are buying on dips. The bulls will then try to push the price above the 50-day simple moving average and take control. That could pave the way for a potential rally to $300.
XRP / USDT
Ripple (XRP) tried to break above the resistance line of the symmetrical triangle but the bears had other plans. They vigorously defended the level and are trying to sink the price again below the 20-day EMA ($0.33).
XRP/USDT daily chart. Source: TradingView
If they succeed, the XRP/USDT pair may extend its stay inside the triangle for some time. The 20-day fixed moving average and the RSI near the midpoint do not give a clear advantage to either the buyers or the sellers.
A breakout and a close above the triangle may signal the beginning of a new upward movement. The pair could then rise to the pattern target at $0.48. Alternatively, a break below the triangle could open the door for a retest of $0.28.
ADA / USDT
Cardano (ADA) rose above the 20-day moving average ($0.47) on July 8, but the bulls were unable to sustain the higher levels. This indicates that the bears are aggressively defending the moving averages.
ADA/USDT daily chart. Source: TradingView
Sellers will try to capitalize on their advantage by pulling the price below the strong support level at $0.44. If they manage to do so, the ADA/USDT pair could drop to the important level of $0.40. A breakout and a close below this support could signal the beginning of the next phase of the downtrend.
To negate this bearish view, buyers will have to push the price and hold it above the 50-day simple moving average ($0.51). If they can do that, the pair could rise to $0.60
