The S&P 500 and Nasdaq have fallen for five straight weeks, suggesting traders are continuing to reduce their exposure to risky assets. Bitcoin (BTC)’s close correlation with the United States stock markets has kept its price under pressure.
Bitcoin extended its decline over the weekend and is now on course for its sixth consecutive weekly loss, the first such event since 2014. Bitcoin’s weakness has impacted the entire crypto markets, whose market cap has fallen below $1.6 trillion. pulled down.
When sentiment is bearish, traders sell on any negative news. Also, the unpegging of Terra’s US dollar stablecoin TerraUSD (UST) appears to be increasing selling pressure across the crypto market.
Is It Time For A Rebound After Bitcoin’s Six Consecutive Weekly Closes In The Red? Let’s examine the charts of the top 5 cryptocurrencies that are showing signs of near-term stabilization.
BTC/USDT
Bitcoin turned off the 20-day exponential moving average ($38,268) on May 5 and plunged below the ascending channel support line. This move also invalidated the relative strength index (RSI) positive divergence.
The moving averages are starting to turn down and the RSI is approaching the oversold territory, indicating that the bears are in control.
The BTC/USDT pair has minor support at $34,322, but if the bulls fail to defend this level, the decline could extend to $32,917. This is a crucial level to watch because if it breaks, the pair could see panic selling and the next stop could be $28,805.
If the price scales up from $34,322, the recovery near the 20-day EMA could be sold. If the price turns down from this level, it will indicate that sentiment remains negative and traders will sell on rallies. That could improve the prospects for a resumption of the downtrend.
This negative view could be invalidated in the short-term if the bulls push and sustain the price above the 20-day EMA. In that case, the pair could rally to the 50-day simple moving average ($41,466).
The down-sloping moving averages indicate that the bears are in command, but the RSI’s oversold levels suggest that a recovery rally or consolidation is possible in the near-term. If the recovery fails to scale above the 20-EMA, the bears could keep selling pressure and the pair could drop to $32,917.
Conversely, a break and close above the 20-EMA could signal the start of a strong recovery rally. The pair could then rise to the 50-SMA. The buyers need to push and hold the price above $40,000 to signal that the downtrend may be over.
ALGO/USDT
Algorand (ALGO) has been trading inside a descending channel pattern for the past few days. The price bounced off the channel support line on May 1st and the bulls have breached the 20-day EMA ($0.69), suggesting that selling pressures might be easing.
If buyers sustain the price above the 50-day SMA ($0.76), the ALGO/USDT pair could rally to the channel’s resistance line. This is an important level for the bulls to clear. If they succeed, this indicates the beginning of a new upward movement. The pair could initially rise to $1.10 and later to $1.25.
On the other hand, if the price turns down from the resistance line, it suggests that the pair could extend its stay inside the channel for a few more days. The bears need to sink the price below the channel and hold it to signal the resumption of the downtrend.
The 20-EMA is up and the RSI is in positive territory, indicating an advantage for buyers. There is a minor resistance at $0.80 and if the bulls clear this hurdle, the pair could rally to the channel resistance line.
On the other hand, the 20 EMA is the critical level to keep an eye on. If the price bounces off this level, it indicates that sentiment has turned in favor of buyers. That could increase the likelihood of a break above $0.80. Alternatively, if the price breaks below the 20-EMA, the next stop could be the 50-SMA.
XMR/USDT
Monero (XMR) has found support near the psychological support at $200 for the past few days. The buyers have not allowed the price to break below the downtrend line, which suggests they are attempting to flip the level towards support.
The bulls need to push and sustain the price above the 20-day EMA ($223) to signal that the correction phase may be over. There is a minor resistance at $240, but if the bulls clear this hurdle, the XMR/USDT pair could rally to $289.
On the contrary, if the price turns down from the current levels or the 20-day EMA, it will indicate that the bears are not giving up yet. That could increase the likelihood of a break below $200. In that case, selling could intensify and the pair could drop to $150.
The pair has formed a symmetrical triangle pattern that indicates indecisiveness between the bulls and the bears. If bulls propel the price above the triangle resistance line, it suggests that the downtrend may be over. The pair could then rally to the 200-SMA and later move higher towards the pattern target at $252.
Conversely, when the uncertainty of the triangle resolves to the downside, it suggests that the triangle has been acting as a continuation pattern. This could signal the resumption of the downward movement. The pattern target on the downside is $164.
Related: LUNA falls 20% in one day as whale dumps Terra’s UST stablecoin – risk of selloff ahead?
XTZ/USDT
Tezos (XTZ) broke below the long-term uptrend line on April 29 and the bears successfully defended the breakout level on May 5. The bears attempted to start the downtrend but are struggling to sustain the lower levels.
When bulls push and sustain the price above the uptrend line, it indicates that the markets have rejected the collapse. The XTZ/USDT pair could then attempt a rally to the overhead zone between the 50-day SMA ($3.18) and $3.40.
This bullish view could be invalidated if the price turns down again from the uptrend line. When that happens, it indicates that the bears have flipped the uptrendline into resistance. A break and close below $2.39 could start a new downtrend that could reach $2.
The 20-EMA has flattened out and the 4-hour chart’s RSI has formed a bullish divergence, indicating that the negative momentum is easing. The pair could now attempt a rally to $2.90 where the bears could offer stiff resistance. A break and close above this level could open the doors for a possible move higher to $3 and later to $3.30.
Alternatively, if the price turns down from the current level or the overhead resistance, it will indicate that bears are selling on rallies. That could keep the pair range bound between $2.90 and $2.39. The downtrend could accelerate if bears sink the price below $2.39.
THETA/USDT
Theta Network’s THETA token has traded between $2.27 and $4.40 for the past few weeks. This range resolved to the downside on May 6th, suggesting that the bears had the upper hand.
Although the 20-day EMA ($2.57) is sloping down, the RSI is attempting to form a bullish divergence, which suggests that the selling momentum is fading. If the bulls push the price back above the $2.27 breakdown level, it could trap several aggressive bears who may have entered short positions on the break below the range.
The THETA/USDT pair could then rally to the 20-day EMA. This is an important level to watch as if the bulls break this barrier, the pair could rally to the 50-day SMA ($3.10).
This bullish view could be invalidated if the price breaks down from current levels or the breakdown level at $2.27 and falls below $2.
The bulls are buying the dips near the $2 psychological level. If buyers propel the price above the downtrend line, it indicates that the bears may lose their footing. The pair could then rally to overhead resistance at $2.64. This level could act as strong resistance again, but if buyers clear this hurdle, bullish momentum could increase.
Contrary to this assumption, if the price turns down from the 20-EMA or the downtrend line, it will indicate that the bears will continue selling on rallies. That could increase the possibility of a break below $2 and the resumption of the downtrend.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should do your own research when making a decision.
https://cointelegraph.com/news/top-5-cryptocurrencies-to-watch-this-week-btc-algo-xmr-xtz-theta BTC, ALGO, XMR, XTZ, THETA