Bitcoin (BTC) and most major altcoins have bounced off their strong support levels but could the rally sustain to the extent that traders feel confident that a bottom is in place?
Bloomberg Intelligence senior commodity strategist Mike McGlone said that Bitcoin’s price is “about 30% below its 20-week moving average,” roughly at the same position, which had led to bottom formations in March 2020 and July 2021.
Although Bitcoin has corrected sharply in January, the exchanges’ balances dropped from 2.428 million Bitcoin on December 28 to 2.366 million Bitcoin on Jan. 24, according to data from CryptoQuant. This indicates that investors may be stashing away their recent purchases safely.
Daily cryptocurrency market performance. Source: Coin360
However, it may not be a V-shaped recovery for Bitcoin as volatility is likely to remain high. Traders will keenly watch the U.S. Federal Reserve’s decision following the conclusion of its two-day policy meeting on Jan. 26.
Could Bitcoin and most major altcoins extend their relief rally? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
The long tail on Bitcoin’s Jan. 24 candlestick shows aggressive buying at lower levels. Sustained buying by the bulls has propelled the price above the immediate resistance at $37,332.70.
BTC/USDT daily chart. Source: TradingView
The BTC/USDT pair could now reach the 20-day exponential moving average ($40,438), which has been acting as a strong resistance during relief rallies. If the price turns down from this resistance, the bears will try to pull the pair below $32,917.17. If they succeed, the pair could drop to the strong support at $30,000.
Conversely, if the price breaks above the 20-day EMA, the pair could rally to the 50-day simple moving average ($44,935). A break and close above this resistance will be the first sign that the corrective phase could be over. The pair could then challenge the 200-day SMA ($48,750).
ETH/USDT
Ether (ETH) sharply bounced off $2,159 on Jan. 24, as seen from the long tail on the day’s candlestick. This suggests that bulls are aggressively buying at lower levels.
ETH/USDT daily chart. Source: TradingView
Sustained buying has pushed the price back into the channel today. This is the first sign of strength. The buyers will now attempt to push and sustain the price above the overhead resistance at $2,652.
If they manage to do that, the ETH/USDT pair could rise to the 20-day EMA ($2,966). The bears are likely to mount a strong defense of this level.
If the price turns down from the 20-day EMA, it will suggest that sentiment remains negative and traders are selling on rallies. The bears will then again try to resume the downtrend by pulling the pair below $2,159.
BNB/USDT
Binance Coin (BNB) rebounded sharply off the $330 support on Jan. 24 as seen from the long tail on the day’s candlestick. This suggests that buyers are aggressively accumulating near $330.
BNB/USDT daily chart. Source: TradingView
The bulls pushed the price back inside the channel on Jan. 25 and will now attempt to drive the BNB/USDT pair to the 20-day EMA ($435). If this hurdle is overcome, the pair could rally to the resistance line of the channel.
On the contrary, if the price turns down from the current level or the 20-day EMA, it will suggest that traders continue to sell on rallies. The bears will then again try to sink the pair below the strong support zone at $330 to $320.
ADA/USDT
Cardano (ADA) is attempting to bounce off the strong support at $1, indicating that bulls are buying on dips to this level. The relief rally could now reach the 50-day SMA ($1.28).
ADA/USDT daily chart. Source: TradingView
If bulls thrust the price above the 50-day SMA, the ADA/USDT pair could rally to the resistance line of the descending channel. A break and close above the channel will signal a possible change in trend.
Conversely, if the price turns down from the moving averages, it will suggest that bears continue to sell on rallies to strong resistance levels. The bears will then again attempt to sink and sustain the price below $1. If they succeed, the pair could decline to $0.80.
SOL/USDT
The bulls again successfully defended the support line of the descending channel on Jan. 24 as seen from the long tail on the day’s candlestick. If bulls push the price above $104.82, Solana (SOL) could reach the 20-day EMA ($125).
SOL/USDT daily chart. Source: TradingView
A break and close above the 20-day EMA will be the first sign that the selling pressure could be reducing. The SOL/USDT pair could then rise to the resistance line of the descending channel. The bulls will have to push the price above the channel to signal a change in trend.
Conversely, if the price turns down from the 20-day EMA, it will suggest that bears continue to sell on rallies. The bears will then again try to sink the pair below the channel. If they succeed, the bearish momentum could pick up and the pair could drop to the psychological support at $50.
XRP/USDT
Ripple (XRP) has been trading inside a tight range between $0.65 and $0.54 for the past few days. This suggests that both bulls and bears are playing it safe and not waging large bets.
XRP/USDT daily chart. Source: TradingView
The downsloping 20-day EMA ($0.70) and the relative strength index (RSI) near the oversold territory indicate that bears have the upper hand. If the price turns down from $0.64, the XRP/USDT pair could plummet to the psychological support at $0.50.
Contrary to this assumption, if bulls drive the price above $0.64, the pair could challenge the 20-day EMA. A break and close above this resistance could open the gates for a rise to the 50-day SMA ($0.79). The bulls will have to clear this hurdle to signal a possible change in trend.
LUNA/USDT
Terra’s LUNA token continues to trade inside the descending channel pattern. The downsloping 20-day EMA ($73) and the RSI in the negative zone indicate an advantage to sellers.
LUNA/USDT daily chart. Source: TradingView
If bears pull the price below $59.13, the LUNA/USDT pair could again drop to the support line of the channel. This level has held during the previous two declines, hence the bulls will again try to defend it.
If they do, the pair could rise to the 20-day EMA and then rally toward the downtrend line of the channel. A break and close above the channel will be the first sign that the downtrend could be over.
Related: Can DeFi and CeFi coexist? Three takeaways from experts panel
DOGE/USDT
The buyers once again purchased the dip below $0.13 on Jan. 24 as seen from the long tail on the day’s candlestick. This started a relief rally, pushing Dogecoin (DOGE) to the 20-day EMA ($0.15).
DOGE/USDT daily chart. Source: TradingView
If bulls drive the price above the moving averages, the DOGE/USDT pair could rally to the critical overhead resistance at $0.19. If the price turns down from this resistance, the pair could extend its stay inside the $0.19 to $0.13 range for the next few days.
Contrary to this assumption, if the price turns down from the moving averages, it will suggest that demand dries up at higher levels. The bears will then try to pull and sustain the price below $0.13. If they do that, the pair could resume its decline to the psychological support at $0.10.
DOT/USDT
The bulls have successfully held Polkadot (DOT) above the critical support at $16.81 for the past few days. This could attract further buying by short-term traders propelling the price toward the breakdown level at $22.66.
DOT/USDT daily chart. Source: TradingView
The 20-day EMA ($22.77) is sloping down and the RSI is in the negative zone, indicating that bears have the upper hand. The DOT/USDT pair is likely to face stiff resistance at this level.
If the price turns down from the 20-day EMA, the bears will again try to pull the pair to $16.81. If this support holds, the pair could remain range-bound for a few days.
A break and close below $16.81 could start the next leg of the downtrend while a break above the 50-day SMA ($25.88) may open the doors for a possible rally to $32.78.
AVAX/USDT
The failure of the bears to sink Avalanche (AVAX) below the $51.04 to $47.66 support zone may have attracted buying from aggressive bulls who have pushed the price above the 200-day SMA ($65).
AVAX/USDT daily chart. Source: TradingView
The AVAX/USDT pair could now rise to the breakdown level at $75.50 where the bears may mount a stiff resistance. This is an important level to watch out for as the 20-day EMA ($80) is placed just above it.
If the price turns down from the breakdown level, the bears will try to pull the pair below the 200-day SMA. If they succeed, the pair could again drop to $51.04. Alternatively, a break and close above the 20-day EMA could open the gates for a possible rally to the downtrend line.
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.
Market data is provided by HitBTC exchange.
