After falling for eight consecutive weeks, the Dow Jones Industrial Average rebounded sharply last week and finished up 6.2%. However, Bitcoin (BTC) has failed to replicate the performance of the United States stock markets and is threatening to paint a red candle for the ninth consecutive week.
A positive sign is Bitcoin whales buying the market correction. Glassnode data shows that the number of Bitcoin whale wallets with a balance of 10,000 Bitcoins or more has risen to the highest level since February 2021. The accumulation in whale wallets shows that long-term views for Bitcoin continue to rise.
Blockware Solutions highlighted that the Mayer Multiple metric, which compares the 200-day simple moving average to the current price, is “close to some of the lowest readings on record.” The firm said several other indicators also show that Bitcoin is trying to make a bottom.
If Bitcoin starts a recovery in the short term, some altcoins are likely to follow it higher. Let’s examine the charts of the top 5 cryptocurrencies that could lead the relief rally.
Bitcoin is stuck in a tight range between the downtrend line and the $28,630 support. The bears pushed the price below $28,630 on May 26 and May 27 but failed to sustain lower. This resulted in a rebound on 28 May.
The bulls will now attempt to push the price above the downtrend line and challenge the 20-day exponential moving average ($30,538). If successful, the BTC/USDT pair could gain momentum and the rally could reach the 50-day SMA ($35,181).
The positive divergence in the relative strength index (RSI) indicates that the bearish momentum may weaken and there may be a rally around the corner.
On the other hand, if the price breaks down from the overhead resistance, the bears will attempt to push the pair back below $28,630. If they do, the pair will complete a bearish descending triangle pattern with a target target of $24.601.
The 20-EMA and 50-SMA on the 4-hour chart have flattened out and the RSI is just above the midpoint, indicating a balance between supply and demand.
The negative descending triangle pattern will be rejected if the bulls push the price above the downtrend line. This may cause a short squeeze as short-term bears can close their positions. This could clear the way for a possible rally to the 200-SMA.
Conversely, the bears will top out if the price declines and dips below $28,630. This could result in a retest of the critical support at $26,700.
Ethereum (ETH) is in a downtrend but the bulls are trying to stop the decline at the critical support at $1700. The price bounced back from this support on May 28 and the bulls are attempting to recover on May 29.
The RSI is forming a bullish divergence indicating the downtrend may weaken. If the bulls push the price above the 20-day EMA ($2,036), the ETH/USDT pair could rise to the overhead resistance at $2,159. Bears are expected to defend this level aggressively. If the price breaks down from this resistance, the pair could remain range-bound between $2,159 and $1,700 for a few days.
On the other hand, if the price breaks from the current level or the 20-day EMA, the bears will try to push the pair back below $1,700. If successful, the pair could resume its downtrend at $1,300 with the next major support.
A bounce of the $1,700 support reached the 20-EMA, where the bears could form a strong defense. If the price declines from this level, it could increase the chances of a break below $1,700. If this happens, the downtrend could continue.
Conversely, if the bulls push the price above the 20-EMA, the pair could rally to the 50-SMA. This level could act as a resistance again, but if the bulls break through this hurdle, the pair could rise to the psychological resistance at $2,000.
Tezos (XTZ) is consolidating in a downtrend. Although the bulls pushed the price above the 20-day EMA ($2) on May 24, they were unable to sustain the recovery. The price broke below the 20-day EMA on May 26.
The 20-day EMA is flattening and the RSI is above 46, indicating that selling pressure is easing. If the bulls push the price above the 20-day EMA, the XTZ/USDT pair could rise towards the 50-day SMA ($2.45). If this resistance is also broken, buyers will try to push the price above the bullish line.
Conversely, if the price drops from the current level, it will show that the bears continue to defend the 20-day EMA. Sellers will then try to push the pair below $1.75, which could open the doors for a drop to $1.64.
The 4-hour chart shows the recovery from the 200-SMA, but the pair has bounced off the uptrend line. The bulls pushed the price above the 50-SMA and will now attempt to break through the general hurdle at the 200-SMA. If they succeed, it will suggest the start of a short-term upward move.
Alternatively, if the price breaks from the current level or the 200-SMA, the pair could drop to the bullish line. A break and close below this support could take the price down to $1.61.
Related: Bitcoin to set a new 9-week record, with BTC price falling 22% in May
KuCoin Token (KCS) broke above the 20-day EMA ($15.61) on May 20 but the bulls failed to push the price above the 50-day SMA ($17.19). This may have encouraged short-term traders to book profits on May 26 that drove the price below the 20-day EMA.
The bears failed to develop their advantage and hold the price below the 20-day EMA, suggesting that the bulls are buying strongly at the lower levels. Buyers pushed the price above the 20-day EMA on May 29.
If the bulls sustain the price above the 20-day EMA, the probability of a break above the 50-day SMA increases. In such a case, the KCS/USDT pair could rise to $18.44 and then to the 200-day SMA ($19.63).
Contrary to this assumption, if the price drops from the current level, it means that traders are selling in rallies. A break and close below $14.92 might open the doors for more declines to $12.90.
The pair is facing stiff resistance at the 200-SMA but the shallow correction shows the bulls buying on small dips. If the bulls push the price above the 200-SMA, the next stop could be $17.14. A break and close above this level could initiate the next leg of the upward move.
Conversely, if the price declines from overhead resistance, the bears can push the pair to the 38.2% Fibonacci retracement level from $14.20 and then the 50% retracement level at $13.30. This zone is likely to act as a strong support.
AAVE climbed to the 20-day EMA ($101) on May 23 but the bulls were unable to push the price above it. This shows that the bears continue to defend the level aggressively, but one small positive is that the buyers are not giving up much ground.
If the price rises and rises above the 20-day EMA, it will indicate the start of a stronger relief rally. The AAVE/USDT pair could then rise to the 50-day SMA ($132), where the bears can again form a strong defense.
Alternatively, if the price breaks from the current level or the 20-day EMA and dips below $89, short-term bulls who may have bought lower could close their positions. This could drive the price down to $79 and then $64.
The 4-hour chart shows that the pair has been fluctuating between $90 and $110 for a while. The 20-EMA and 50-SMA are flat and the RSI is just above the midpoint, indicating a balance between supply and demand.
If this balance pushes and sustains the price above $110, buyers could turn in their favor. If they do, the pair could rally to $130 and then $143. Conversely, if the price drops below $90, the bears will gain the upper hand. The pair could then drop to $80 and then to $70.
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