BTC and most altcoins are attempting to capitalize on today’s market-wide oversold bounce but the recovery could be thwarted by sell pressure at overhead resistance levels.
Analysts are attributing Bitcoin’s (BTC) plunge on Sep. 7 to the liquidation of over-leveraged positions. According to Bybt data, about $3.68 billion worth of long positions were liquidated in the last 24 hours in the Bitcoin options market.
On-chain monitoring resource Whalemap said the decline was largely caused due to selling by whales who had recently bought their Bitcoin and not by the HODLers. Separately, analyst Willy Woo also said:
“Leverage markets sold off but investor buying just got stronger.”
Every bull market has its share of corrections where weaker hands are shaken out and the stronger hands solidify their position. Therefore, if investors believe in the long-term story, they should not be perturbed by the pullbacks.
A new report by Standard Chartered’s cryptocurrency research team has projected Bitcoin to reach $100,000 “in late 2021 or early 2022” and $175,000 in the long-term. The analysts are also positive on Ether (ETH), valuing it “structurally” between $26,000 and $35,000.
Is the correction in Bitcoin and altcoins over or could there be another leg down? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
Bitcoin witnessed huge volatility on Sep. 7 when it plunged from an intraday high at $52,920 to an intraday low at $42,843.05. Strong buying at lower levels resulted in a sharp recovery by the close, as seen from the long tail on the day’s candlestick.
Today, the bulls held off another attempt by the bears to extend the correction by pulling the price below the 50-day simple moving average ($44,391). This suggests that traders are aggressively defending the zone between the 50-day SMA and the breakout level at $42,451.67.
If the zone holds, the bulls will try to push the price above the 20-day exponential moving average ($48,216). If they succeed, the BTC/USDT pair could again rise to $52,920 but the bears are unlikely to give up easily.
The relative strength index (RSI) has dropped below 47 and the 20-day EMA has started to turn down, indicating that bears have made a strong comeback. If the price turns down from the 20-day EMA, the bears will again try to sink the pair below $42,451.67. If that happens, the pair could enter a deeper corrective phase.
ETH/USDT
Ether’s failure to rise and sustain above $4,000 could have attracted aggressive profit-booking from the short-term traders. The selling intensified after the price slipped below the immediate support at $3,705.05.
The bulls could not arrest the decline at the 20-day EMA ($3,486), resulting in a drop to the critical support at $3,000. This level attracted strong buying and the ETH/USDT pair staged a strong recovery, as seen from the long tail on the day’s candlestick.
Although bulls pushed the pair above the 20-day EMA today, they have not been able to sustain the price above it. This shows that bears are selling on rallies. The flat 20-day EMA and the RSI near the midpoint, suggest a range-bound action in the next few days.
ADA/USDT
Vertical rallies are usually followed by waterfall declines as traders rush to the exit and that is what happened in Cardano (ADA) on Sep. 7. The failure to sustain the price above the psychological level at $3 may have resulted in aggressive profit-booking by the bulls.
As the decline broke below the 20-day EMA ($2.62), it may have triggered several stops. Due to that, the ADA/USDT pair could have plummeted to the 50-day SMA ($2.03). The long tail on the day’s candlestick shows aggressive buying at lower levels.
If bulls fail to push and sustain the price above the 20-day EMA, the bears are likely to make one more attempt to sink the price below the 50-day SMA. If they pull it off, it will signal a change in trend where rallies are likely to be sold into.
Alternatively, if buyers successfully defend the 50-day SMA, the pair could enter a consolidation for the next few days.
BNB/USDT
Binance Coin (BNB) turned down from the overhead resistance at $518.90 on Sep.7 and broke below the moving averages. Although bulls defended the 50-day SMA ($399) on a closing basis, the failure to push and sustain the price above $433 may attract further selling.
The 20-day EMA ($458) has started to turn down and the RSI slipped into the negative territory, indicating that bears have the upper hand. They are likely to sell on relief rallies to the 20-day EMA.
If the price turns down and breaks below the 50-day SMA, the BNB/USDT pair could drop to the next support at $340. Such a move could keep the pair range-bound between $340 and…
cointelegraph.com