Bitcoin’s chart shows a tug-of-war between bulls and bears, and this is having a slight impact on the upward
Bitcoin’s chart shows a tug-of-war between bulls and bears, and this is having a slight impact on the upward price action of most altcoins.
Risk assets have started the new year on a strong note. The S&P 500 (SPX) and the Nasdaq closed in the positive for the second successive week and also notched their best weekly performance since November.
Bitcoin (BTC) led the recovery in the crypto markets with a sharp 21% rally last week. That sent the Bitcoin Fear and Greed Index into the neutral territory of 52 on Jan. 15, its highest since April 5, 2022. However, the index has given back its gains and is again back into the Fear zone on Jan. 17.
The strong rally in Bitcoin has divided analysts’ opinions. While some expect the rally to be a bull trap, others believe that the up-move could be the start of a new bull market. The confirmation of the same will happen during the next dip. If the cryptocurrencies form a higher low followed by a higher high, it will suggest that the downtrend could be over.
Could the S&P 500 extend its rally? What are the critical levels on BTC and the cryptocurrencies to watch out for? Let’s study the charts to find out.
SPX
The S&P 500 continued its recovery last week and has reached the downtrend line. The 20-day exponential moving average (3,904) has started to turn up and the relative strength index (RSI) is in the positive territory, indicating advantage to the buyers.
The bulls will have to thrust and sustain the price above the downtrend line to signal a potential trend change. The bears may try to stall the up-move in the 4,100 to 4,120 zone but if bulls overcome this resistance, the index could rally to 4,200 and then 4,325.
If bears want to prevent this change in trend, they will have to quickly pull the price below the moving averages. If they do that, it will suggest that higher levels are attracting sellers. The index could then slide to 3,764.
DXY
The U.S. dollar index (DXY) has been falling inside a descending broadening wedge pattern for the past few days. Buyers are trying to protect the support line of the wedge.
The relief rally could reach the 20-day EMA (103), which could act as a strong barrier. If the price turns down from this level, it will suggest that the sentiment remains negative and traders are selling on minor rallies. The bears will then try to resume the downtrend and sink the price to the psychological support at 100.
Contrarily, if buyers propel the price above the 20-day EMA, the index could march toward the resistance line of the wedge. The 50-day SMA (105) is placed close to the resistance line, hence the bears are likely to mount a strong defense at this level.
BTC/USDT
Buyers are trying to pierce the overhead resistance at $21,480 and extend the recovery in Bitcoin but the bears are in no mood to relent. The RSI remains in deeply overbought territory, indicating a possible consolidation or correction in the near term.
The immediate support on the downside is the psychological level of $20,000 and then the 38.2% Fibonacci retracement level of $19,489. If the price turns up from this zone, it will suggest that traders are viewing the dips as a buying opportunity.
Buyers will then make one more attempt to drive the price above $21,500. If they succeed, the BTC/USDT pair could start the next leg of the up-move. The pair could then rise to $22,800 and later make a dash to $25,211.
Contrarily, if the price breaks below $19,489, the pair could plummet to the breakout level of $18,388.
ETH/USDT
Ether’s (ETH) recovery met with strong resistance at $1,600 on Jan. 14 but the bulls are not ceding ground to the bears. This suggests that the bulls expect the up-move to continue after a brief pause.
If the price consolidates in a tight range near $1,600, it will enhance the prospects of a break above the overhead resistance. The ETH/USDT pair could then climb to $1,700 and later to $1,800.
Alternatively, if the price turns down and breaks below $1,516, the pair could witness profit booking. The pair could then slump to the 38.2% Fibonacci retracement level of $1,439 and thereafter to the 20-day EMA ($1,362). This zone could attract strong buying by the bulls.
BNB/USDT
BNB (BNB) reached the overhead resistance at $318 on Jan. 14. The long wick on the day’s candlestick shows that the bears are trying to protect the level.
However, the rising 20-day EMA ($276) and the RSI near the overbought zone suggest that bulls have the upper hand. If the price turns up from the current level or the 20-day EMA, the bulls will strive to drive the BNB/USDT pair to $338. A break above this resistance could signal the start of a new up-move.
On the contrary, if the price turns down…
cointelegraph.com