Bitcoin and select altcoins have rebounded sharply off their support levels, a possible sign that traders are buying the recent dip in the market.
Bitcoin (BTC) is leading the cryptocurrency markets on the path to recovery. Although the United States Consumer Price Index (CPI) print for January was marginally higher than expectations, it did not dent the enthusiasm of bullish crypto trader.
A positive response to seemingly negative data is a sign that the sentiment is bullish and traders are looking for buying opportunities.
However, some analysts are cautious due to the strengthening of the U.S. dollar index (DXY). They believe that a sustained rally in the DXY could limit the upside in cryptocurrencies.
Usually, long-term downtrends are followed by a base formation. During this phase, several analysts remain skeptical about a rally but the price action continues to surprise them. Although data is important, short-term traders should focus more on price action and devise a suitable strategy.
What are the critical levels to keep an eye on? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
Bitcoin bounced off the $21,480 level on Feb. 14 and reached the 20-day exponential moving average ($22,235). This shows that buyers are trying to arrest the correction near the 38.2% Fibonacci retracement level of $21,228. A shallow pullback is an indication that traders are buying on minor dips.
If bears want to strengthen their position, they will have to aggressively defend the $22,800 level and sink the price below $21,228. If they do that, the BTC/USDT pair may extend the correction to the 50% retracement level at $20,294. The deeper the correction, the longer it is likely to take for the next leg of the up-move to begin.
Conversely, if bulls drive and sustain the price above $22,800, the pair could rally to $23,500 and then to $24,255. The bears are expected to fiercely guard this zone. If the price turns down from it, the pair may remain range-bound between $21,228 and $24,255 for a few days.
ETH/USDT
Ether (ETH) continues to trade between the moving averages. The strong rebound off the 50-day simple moving average ($1,483) on Feb. 14 displays demand at lower levels.
The flattening 20-day EMA ($1,569) and the RSI near the midpoint suggest a balance between supply and demand. A break above the 20-day EMA will tilt the advantage in favor of the buyers. The ETH/USDT pair could then retest the solid overhead resistance at $1,680.
On the contrary, if the price turns down from the current level and plummets below the 50-day SMA, it will signal advantage to bears. That may start a deeper correction to the next strong support at $1,352.
BNB/USDT
BNB (BNB) plunged below the 50-day SMA ($293) on Feb. 13 but the bears could not build upon this advantage. The long tail on the day’s candlestick shows strong buying near $280.
The 20-day EMA has started to turn down and the RSI is in the negative territory, indicating that bears have a slight edge. The next drop to $280 increases the risk of a breakdown. Below this support, the BNB/USDT pair could extend its decline to $260.
If the price turns up from the current level and rises above the 20-day EMA, it will indicate solid demand at lower levels. That could enhance the prospects of a rally to the neckline of the bullish inverted head and shoulders (H&S) pattern.
XRP/USDT
XRP (XRP) jumped up from the strong support at $0.36 on Feb. 14 and reached the 50-day SMA ($0.38). The bears are likely to sell the relief rally to the moving averages.
If the price turns down from the current level, it will suggest that bears are selling on rallies. That may result in a retest of the support at $0.36. This is an important level for the bulls to defend because if it cracks, the XRP/USDT pair will form a head and shoulders pattern. This bearish setup has a target objective of $0.29.
Alternatively, if the price rises above the moving averages, it will indicate that the pair may oscillate between $0.42 and $0.36 for a while longer.
ADA/USDT
Cardano (ADA) attracted solid buying at the 50-day SMA ($0.34) as seen from the long tail on the Feb. 13 candlestick. The bulls followed it up with another strong up-move on Feb. 14 which rose above the 20-day EMA ($0.38).
If the price sustains above the 20-day EMA, the bulls will try to propel the ADA/USDT pair above the neckline of the inverse head and shoulders pattern. If they succeed, the pair could pick up momentum and soar above the immediate resistance at $0.44. The next major hurdle is $0.52 and if this is crossed, the rally may extend to the pattern target of $0.60.
Contrarily, if the price turns down and breaks below…
cointelegraph.com