Bitcoin’s (BTC) bounce fizzled out near $24,500 on Aug. 17, indicating that the recovery still faces stiff resistance from the bears. On-chain monitoring resource Material Indicators said the ask liquidity on the Fire Charts was similar to prior local tops.
Another reason for caution among crypto investors was that the recovery in the S&P 500 was reaching extreme overbought levels in the near term. Jurrien Timmer, director of global macro at asset manager Fidelity Investments, said that 88% of stocks in the S&P 500 were trading above their 50-day moving average, which was “stunning.”
Some were also cautious as Michael Burry, the investor who famously shorted the 2008 housing bubble, almost emptied his equity portfolio in the second quarter of this year in expectation of a sharp fall in the stock markets.
While the short-term looks uncertain, corporate investors who usually are in the game for the long term have increased their investments in the blockchain industry, including the crypto space. The top 40 publicly traded companies invested approximately $6 billion into blockchain startups between September 2021 to June 2022, according to a blog by Blockdata on Aug. 17. That is more than three times the $1.9 billion invested by corporations between January 2021 to September 2021.
What are the critical levels on the downside that will suggest that the recovery could be faltering? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
The bulls attempted to push Bitcoin above the overhead resistance at $24,668 on Aug. 17 but the long wick on the candlestick shows that bears are defending the level aggressively. The price turned down and has reached the 20-day exponential moving average (EMA) ($23,496). This level is likely to attract strong buying by the bulls.
The 20-day EMA has flattened out and the relative strength index (RSI) has dropped close to the midpoint, indicating a balance between supply and demand. If the price sustains below the 20-day EMA, the balance could tilt in favor of the bears and the pair may drop to the 50-day SMA ($22,160).
Conversely, if the price rebounds off the current level and breaks above $25,200, it will suggest that bulls are back in command. The BTC/USDT pair could then rally to $28,000 where the bears may again mount a strong defense.
ETH/USDT
Ether (ETH) turned up from $1,853 on Aug. 16 and the bulls tried to push the price above $2,000 on Aug. 17. However, the long wick on the day’s candlestick suggests that traders may be lightening positions on rallies.
The bears will try to take advantage of the situation and attempt to pull the price to the strong support zone between the 20-day EMA ($1,772) and $1,700. This is an important zone for the bulls to defend if they want to keep the uptrend intact.
If the price rebounds off this support zone, the ETH/USDT pair could retest the resistance at $2,030. A break and close above this level could clear the path for a rally to the downtrend line.
Instead, if the $1,700 support cracks, the pair could drop to the 50-day SMA ($1,492). That could delay the start of the next leg of the up-move and keep the pair range-bound for a few days.
BNB/USDT
The buyers tried to push BNB higher on Aug. 17 but the long wick on the candlestick suggests that bears are active at higher levels. That pulled the price to the 20-day EMA ($307).
If the price slips below the 20-day EMA, the BNB/USDT pair could decline to the 50-day SMA ($270). This level may again attract buying and if the price rebounds off it, the pair could consolidate between $270 and $338 for some time.
Another possibility is that the price rebounds off the current level with strength. If that happens, it will suggest that the sentiment remains positive and traders are buying on dips. The bulls will then again attempt to clear the overhead resistance zone between $338 and $350. If they succeed, the pair could start a rally to $383 and then to $413.
XRP/USDT
The bulls successfully defended the zone between the moving averages and tried to push Ripple (XRP) above the overhead resistance at $0.39 on Aug. 17. The long wick on the day’s candlestick shows that bears are not willing to surrender and they continue to defend the overhead resistance with vigor.
If the price breaks and closes below the 20-day EMA ($0.37), the next stop could be the 50-day SMA ($0.35). This is an important level for the bulls to defend because a break and close below it could suggest that the XRP/USDT pair may continue its range-bound action between $0.30 and $0.39 for a few more days.
Alternatively, if the price rebounds off the moving averages, the bulls will again try to clear the overhead hurdle at $0.39. If they succeed, the pair could rally to $0.48 and then to $0.54.
ADA/USDT…
cointelegraph.com