The S&P 500 and Nasdaq have fallen for five consecutive weeks, indicating that traders continue to reduce their exposure to risky assets. bitcoins (BTC) the close correlation with US equity markets has ensured that its price remains under pressure.
Bitcoin extended its decline over the weekend and is now on track for its sixth straight weekly lossthe first such event since 2014. Bitcoin’s weakness sent all of the crypto markets down, including market capitalization fell below $1.6 trillion.
When sentiment is bearish, traders sell on every negative news. the depeg of Terra’s US dollar stablecoin TerraUSD (UST) also appears to be increasing selling pressure in the crypto market.
After Bitcoin’s six consecutive weekly closes in the red, is it time to pick up again? Let’s study the charts of the top 5 cryptocurrencies that show signs of stabilization in the short term.
Bitcoin turned down the 20-day exponential moving average (EMA) of $38,268 on May 5 and fell below the ascending channel support line. This move also invalidated the positive divergence on the Relative Strength Index (RSI).
The moving averages have started to decline and the RSI is approaching the oversold zone, signaling that the bears are under control.
BTC/Tether (USDT) has minor support at $34,322, but if the bulls fail to defend this level, the decline could extend to $32,917. This is a crucial level to watch because if it breaks, the pair could witness a panic sell and the next stop could be $28,805.
If the price breaks from $34,322, the rally could face a selloff near the 20-day EMA. If the price drops from this level, it will suggest that sentiment remains negative and traders are selling on rallies. This could improve the outlook for a resumption of the downtrend.
This negative view could be invalidated in the short term if the bulls push and hold the price above the 20-day EMA. If that happens, the pair could hit the 50-day simple moving average (SMA) of $41,466.
The downward sloping moving averages indicate that the bears are in control, but the oversold levels on the RSI suggest that a relief rally or consolidation is possible in the near term. If the rally fails to break above the 20-EMA, the bears could keep the selling pressure going and the pair could drop to $32,917.
Conversely, a breakout and close above the 20-EMA could signal the start of a strong relief rally. The pair could then go up to the 50-SMA. Buyers will need to push and hold the price above $40,000 to signal that the downtrend may be over.
Algorand(ALGO) has been trading in a descending channel pattern for the past few days. The price bounced off the channel support line on May 1 and the bulls broke through the hurdle at the 20-day EMA of $0.69, indicating that the selling pressure may be easing.
If the buyers hold 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 bulls to overcome. If they succeed, it will suggest the beginning of a new upward movement. The pair might rise to $1.10 first and later to $1.25.
On the other hand, if the price drops from the resistance line, it will suggest that the pair might extend its stay inside the channel for a few more days. The bears will have to sink and hold the price below the channel to indicate the resumption of the downtrend.
The 20-EMA has appeared and the RSI is in positive territory, indicating an advantage for buyers. There is a minor resistance at $0.80 and if the bulls break through this hurdle, the pair could reach the resistance line of the channel.
On the other hand, the 20-EMA is the critical level to watch. If the price bounces off this level, it will suggest that sentiment has turned in favor of the buyers. This could increase the likelihood of a break above $0.80. Alternatively, if the price slips below the 20-EMA, the next stop could be the 50-SMA.
Monero (XMR) has found support close to psychological support at $200 in recent days. The buyers did not let the price break below the downtrend line, suggesting that they are trying to turn the level into support.
The bulls will need to push and hold 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.
On the contrary, if the price is falling from the current level or the 20-day EMA, it will suggest that the bears have not given up yet. This could increase the likelihood of a break below $200. If that happens, the selling could intensify and the pair could drop to $150.
The pair formed a symmetrical triangle pattern suggesting indecision among bulls and bears. If the bulls push the price above the resistance line of the triangle, it will suggest that the downtrend may be over. The pair could then rally at the 200-SMA and later rally towards the pattern target at $252.
Conversely, if the triangle’s uncertainty resolves on the downside, this will suggest that the triangle has acted as a continuation pattern. This could signal the resumption of the downward move. The downside pattern target is $164.
Tezos (XTZ) crossed the long-term uptrend line on April 29th and the bears successfully defended the breakout level on May 5th. The bears have attempted to initiate the downtrend but are struggling to sustain the lower levels.
If the bulls are pushing and holding the price above the uptrend line, it will suggest that the markets have rejected the breakdown. The XTZ/USDT pair may then attempt a rally towards the air zone between the 50-day SMA of $3.18 and $3.40.
This positive view could be invalidated if the price falls again from the uptrend line. If this happens, it will suggest that the bears have reversed the uptrend line at resistance. A breakout and close below $2.39 could trigger a fresh downtrend that could reach $2.00.
The 20-EMA flattened out and the RSI formed a bullish divergence on the 4-hour chart suggesting that the negative momentum is waning. The pair could now attempt a rally to $2.90 where the bears could offer strong resistance. A break and close above this level could open the doors for a possible rise to $3.00 and later to $3.30.
Alternatively, if the price is falling from the current level or overhead resistance, this will suggest that the bears are selling on rallies. This could keep the pair in a range between $2.90 and $2.39. The downtrend could accelerate if the bears push the price down below $2.39.
Theta Network (THETA) had been trading between $2.27 and $4.40 for several 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, indicating that the selling momentum is weakening. If the bulls push the price back above the $2.27 breakdown level, it could trap several aggressive bears who may have initiated short positions on the breakout below the range.
The THETA/USDT pair could then reach the 20-day EMA. This is an important level to watch because if the bulls overcome this barrier, the pair could rally to the 50-day SMA of $3.10.
This positive view could be invalidated if the price declines from the current level or the breakdown level at $2.27 and drops below $2.00.
The bulls buy the dips near the psychological level at $2.00. If the buyers are pushing the price above the downtrend line, it will suggest that the bears may be losing their grip. The pair could then rally to the overhead resistance at $2.64. This level can again act as a strong resistance, but if the buyers break through this hurdle, the bullish momentum could resume.
Contrary to this assumption, if the price is falling from the 20-EMA or the downtrend line, it will suggest that the bears are continuing to sell on the rallies. This could increase the possibility of a break below $2.00 and the 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 conduct your own research when making a decision.