Bitcoin and most major altcoins are attempting a recovery, but they are likely to face strong resistance at higher levels.
Bitcoin (BTC) is attempting to extend its recovery by rising above the psychological mark at $50,000, but several popular analysts believe that BTC could remain range-bound for a few weeks or even months.
On-chain analytics firm CryptoQuant said that Bitcoin “whales are still depositing BTC to exchanges.” This simply indicates that whales are setting themselves up to react at short notice depending on which path the price elects to take.
The sharp correction of the past few days has pulled the Crypto Fear and Greed Index to 16, which indicates a sentiment of “extreme fear.” Some believe the current fall looks similar to the March 2020 crash.
However, CoinCorner CEO Danny Scott said that Bitcoin’s fall was due to the liquidation of positions by gamblers and not because of sentiment. According to him, the sentiment is “still very bullish.”
After the most recent shakeout, could Bitcoin start a strong recovery and lead crypto markets higher? Let’s study the charts of the top 10 cryptocurrencies to find out.
Bitcoin broke below the uptrend line and the psychological support at $50,000, which may have resulted in panic selling by traders. Although bulls purchased the dip aggressively, they are finding it difficult to push the price above $50,000.
The downsloping 20-day exponential moving average (EMA) ($55,551) and the relative strength index (RSI) near the oversold zone indicate that bears are in command. The sellers will attempt to flip the uptrend line into resistance. If that happens, the bears will again try to sink the BTC/USDT pair to the strong support zone at $42,000 to $39,600.
Alternatively, if bulls push the price above the uptrend line, the pair could rally to the 20-day EMA. This is an important level to watch out for because a break and close above it will be the first sign that bears may be losing their grip. The pair could then rally to the overhead resistance at $61,000.
Ether (ETH) plummeted below the 100-day simple moving average (SMA) ($3,873) on Dec. 4 but the bears could not sustain the lower levels. This suggests that traders are accumulating on dips.
The recovery attempt is facing stiff resistance near $4,250. The bears again attempted to pull the price below the $3,900 support on Dec. 6 but the long tail on the candlestick suggests that bulls are defending the level.
If buyers push and sustain the price above the 20-day EMA ($4,315), the ETH/USDT pair could rise to the overhead resistance at $4,868. A break and close above this resistance will indicate the resumption of the uptrend.
On the contrary, if the price turns down from the 20-day EMA, the bears will make one more attempt to sink and sustain the pair below the 100-day SMA. If they succeed, the pair could drop to $3,400.
Binance Coin (BNB) broke and closed below the 20-day EMA ($592) on Dec. 3. That was followed by a sharp sell-off on Dec. 4, which pulled the price to the 100-day SMA ($496).
The buyers aggressively defended the 100-day SMA as seen from the long tail on the day’s candlestick. The recovery could reach the 20-day EMA where the bears are likely to mount a strong resistance.
If the price turns down from the overhead resistance, the BNB/USDT pair could remain stuck between the moving averages.
A break and close above the 20-day EMA could clear the path for an up-move to the overhead resistance zone at $669.30 to $691.80. This positive view will be negated on a drop below the 100-day SMA. The pair could then drop to $435.30.
Solana (SOL) turned down and re-entered the triangle on Dec. 3. This could have trapped the aggressive bulls who bought the breakout of the triangle on Dec. 1 and 2.
The selling picked up momentum after the SOL/USDT pair broke and closed below the 20-day EMA ($209). The bears pulled the price below the support line of the triangle and the 100-day SMA ($181) on Dec. 4.
Although bulls purchased this dip and again defended the 100-day SMA on Dec. 5, they could not build upon the recovery.
The bears pounced on this opportunity and are currently attempting to sink the price below the 100-day SMA. If they manage to do that, the pair could drop to the strong support zone at $120 to $140.
Cardano (ADA) turned down from the 20-day EMA ($1.63) on Dec. 3, indicating that sentiment remains negative and traders are selling on rallies.
The selling intensified on Dec. 4 and the ADA/USDT pair plunged to $1.18. Although bulls purchased this dip, they could not sustain the recovery. This indicates that demand dries up at higher levels.
If bears sink the price below $1.18, the pair could plummet to the strong support at $1 where buyers are expected to defend the level with all their might. A break and close above the 20-day EMA will be the first sign that the bears may be losing their grip.
Ripple (XRP) broke below the strong support at $0.85 on Dec. 4 and fell to an intraday low at $0.60. Aggressive buying at lower levels helped stage a strong recovery as seen from the long tail on the day’s candlestick.
The buyers attempted to push the price above $0.85 on Dec. 5 but failed. This suggests that the level has flipped into resistance. The bears will now again try to resume the down move and sink the XRP/USDT pair to $0.60.
The RSI has dropped into the oversold territory, indicating that the pair could witness a consolidation or a relief rally in the next few days.
If bulls drive the price above $0.85, the pair may rally to the 20-day EMA ($0.97) where bears may again pose a stiff challenge. A break and close above this level will suggest that the sellers may be losing their grip.
Polkadot (DOT) plummeted below the strong support at $32.21 on Dec. 4 and dropped to the next critical level at $25. Although bulls defended this support, the weak rebound suggests a lack of aggressive buying at higher levels.
The price turned down on Dec. 5 and the bears are again attempting to pull the DOT/USDT pair below the strong support at $25. If they succeed, the pair could drop to $22.50 and later to $20.
On the other hand, if the price rebounds off the current level, it will suggest that buyers are defending this level with all their might. The pair could then rise to the 20-day EMA ($36).
If the price turns down from this level, it will indicate that sentiment remains negative and traders are selling on rallies. The bulls will have to push and sustain the price above the 20-day EMA to indicate a possible change in trend.
Related: Grayscale finds that over 25% of US households surveyed currently own Bitcoin
Dogecoin (DOGE) plunged below the critical support at $0.15 on Dec. 4 but bulls purchased this dip as seen from the long tail on the candlestick. The failure of the buyers to push the price to the overhead resistance at $0.19 indicates a lack of demand at higher levels.
The bears are trying to pull the price back below $0.15 on Dec. 6. If this support is breached, the selling could intensify and the DOGE/USDT pair could drop to $0.13 and then to the psychological support at $0.10.
Conversely, if the price rebounds off the current level, it will suggest that bulls are defending the $0.15 support aggressively. The pair could then rise to the overhead resistance at $0.19. A break and close above this level and the 20-day EMA ($0.20) will signal a possible trend change.
Terra’s LUNA token was hugely volatile on Dec. 4 but the strong closing on the day shows that bulls came on top. However, the buyers could not keep up the momentum, resulting in profit-booking on Dec. 5.
The bears tried to pull the price back into the ascending channel on Dec. 6 but the bulls are likely to defend this level with vigor. The upsloping 20-day EMA ($55) and the RSI in the positive zone indicate the advantage to buyers.
If the price rebounds off the current level, the bulls will attempt to thrust the price above the all-time high at $78.29 and resume the uptrend. The LUNA/USDT pair could then rally to $90.
This positive view will invalidate if bears pull the price below the 20-day EMA. That could open the doors for a possible decline to the support line of the channel.
Avalanche (AVAX) turned down sharply on Dec. 4 and plunged to the strong support at $81. The bulls purchased this dip but the weak bounce indicates a lack of demand at higher levels.
The bears again attempted to sink and sustain the price below the strong support at $81 and the 100-day SMA ($73) on Dec. 6 but the rebound suggests that bulls are accumulating on dips.
The AVAX/USDT could rise to the 20-day EMA ($104) where the bears are expected to mount a strong resistance. A break and close above the 20-day EMA and the downtrend line will signal a possible change in trend.
Conversely, if the price turns down from the current level or the 20-day EMA, it will suggest that bears continue to sell on rallies. That could pull the pair to the 100-day SMA.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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