The US dollar’s rise has put brakes on Bitcoin’s price recovery, but lower levels are likely to attract buye
The US dollar’s rise has put brakes on Bitcoin’s price recovery, but lower levels are likely to attract buyers for BTC and altcoins such as DOGE.
The United States dollar index (DXY) has started a strong recovery and its rise is putting pressure on Bitcoin (BTC) and the S&P 500 (SPX) index. The market participants will be keenly watching for any insights on future rate hikes when the Federal Reserve Chairman Jerome Powell speaks before the Economic Club of Washington on Feb. 7.
Meanwhile, Bitcoin’s 43% rebound in January has improved sentiment among small investors. Crypto analytics firm Santiment said that the number of Bitcoin addresses holding 0.1 Bitcoin or less soared by 620,000 to hit 39.8 million, the highest level since Nov. 19.
With the sentiment turning positive, traders usually buy the dips as they anticipate the uptrend to continue. However, some analysts believe that the dip buyers will get trapped and Bitcoin may fall to the $19,000 to $21,000 support zone or worse, witness a capitulation in the next few weeks.
Could the S&P 500 and the cryptocurrency markets witness profit booking in the short term? What are the critical support levels to watch out for? Let’s study the charts to find out.
SPX
The S&P 500 index soared above the 4,101 resistance on Feb. 1 but the bears are unlikely to give up without a fight. They will try to pull the price back above 4,101 and trap the aggressive bulls.
The onus is upon the bulls to try and protect the zone between 4,101 and the 20-day exponential moving average (4,033). If the price rebounds off this zone, the likelihood of a break above 4,200 increases. That could clear the path for a possible rally to 4,300 where the bears may again erect a strong barrier.
On the downside, the 20-day EMA is the crucial support to keep an eye on. A break and close below it will suggest that the bulls may be losing their grip, putting the index in danger of dropping to the uptrend line.
DXY
The U.S. dollar index made a strong comeback on Feb. 2, indicating aggressive buying at lower levels. Buyers maintained their momentum and pushed the price above the 20-day EMA (102) on Feb. 3.
The index could rally to the resistance line of the descending broadening wedge pattern where the bears will try to halt the recovery. This is an important level for the sellers to defend if they want to maintain the upper hand.
Alternatively, the bulls will have to push and sustain the price above the wedge to start a meaningful recovery to 108. The 20-day EMA is flattening out and the relative strength index (RSI) has jumped into the positive territory, indicating that the selling pressure may be reducing.
BTC/USDT
Bitcoin has pulled back to the crucial support zone between $22,800 and the 20-day EMA ($22,489). This is an important zone for the bulls to protect if they want to keep the uptrend intact.
If the price rebounds from here, the bulls will try to push the BTC/USDT pair above $24,255 and challenge the overhead resistance at $25,000. The bears are expected to guard this level with all their might because a break and close above $25,000 could signal that the bear market is over for goo.
On the contrary, a deeper pullback comes into play if the price turns down and breaks below the 20-day EMA. The important levels to watch on the downside are $21,480 and the 50-day simple moving average ($19,697).
ETH/USDT
Ether (ETH) remains sandwiched between the 20-day EMA ($1,591) and the overhead resistance at $1,680. This tight-range trading is unlikely to continue for long and a breakout may happen soon.
If the price plummets below the 20-day EMA, the ETH/USDT pair could continue lower and reach $1,500. This level may attract buyers and a bounce off it will keep the pair inside the $1,500 to $1,680 range for a few days.
The bears must then sink the price below $1,500 to gain the upper hand. The pair could then start a deeper correction to $1,352. On the other hand, buyers will have to propel the pair above $1,680 to start a rally to $1,800, and thereafter to $2,000.
BNB/USDT
Buyers pushed BNB’s (BNB) price above the $335.50 resistance on Feb. 5. But the long wick on the candlestick shows that bears are selling at higher levels. The price pulled back to the breakout level of $318 where the bulls are buying aggressively as seen from the long tail on the Feb. 6 candlestick.
The bears will have to sink the price below the 20-day EMA ($312) to clear the path for a decline to the 50-day SMA ($281).
Conversely, if the price turns up from the current level and breaks above $338, it will suggest that the bulls have flipped the $318 level into support. The BNB/USDT pair will then likely resume the rally and reach…
cointelegraph.com