The Dow Jones Industrial Average has declined for eight consecutive weeks, its first such losing streak since 1923. On May 20, the S&P 500 briefly fell into the bear market, suggesting traders continued to sell off risky assets on fears of a recession.
Due to its close correlation with US stock markets, Bitcoin (BTC) has been under pressure for many weeks. The bulls are looking to propel Bitcoin higher over the weekend and stave off an even longer losing streak.
Daily crypto market data view. Source: Coin360
Bitcoin’s five-month performance was its worst since 2018, suggesting sellers are in control. However, after several weeks of weakness, crypto markets could be on the cusp of a bear market rally.
What are the critical levels that can signal the start of a sustained recovery? Let’s study the charts of the top 5 cryptocurrencies that could outperform in the short-term.
BTC/USDT
Bitcoin bounced off the key support at $28,630 on May 20, indicating strong buying near this level. The bulls are attempting to push the price above the downtrend line, which could be a first indication that the selling pressure is easing.
BTC/USDT daily chart. Source: TradingView
Above the downtrend line, the BTC/USDT pair could rally to the 20-day exponential moving average ($31,887). The bears should vigorously defend this level. If the price turns down from the 20-day EMA, the bears will make another attempt to sink the pair below $28,630.
If they succeed, the pair could drop to $26,700. This is an important level to watch as a break and close below could open the doors for a drop to $25,000 and then $21,800.
Conversely, if buyers push the price above the 20-day EMA, the pair could attempt a rally to the 61.8% Fibonacci retracement level at $34,823. If this level scales, the pair could scale to the 50-day simple moving average ($37,289).
BTC/USDT 4 hour chart. Source: TradingView
The 4 hour chart shows the price being sandwiched between the downtrend line and $28,630. The 20-EMA and 50-SMA have flattened out and the Relative Strength Index (RSI) is just above the midpoint, suggesting a balance between supply and demand.
This equilibrium could tip in buyers’ favor if they push and sustain the price above the downtrend line. If that happens, the pair could begin its northward march towards the 200-SMA.
On the contrary, if the price turns down from the current level, the bears will try to push the pair below $28,630 and gain the upper hand.
BNB/USDT
Binance Coin (BNB) rebounded sharply from the critical support at $211 and has reached the overhead resistance at the 20-day EMA ($323). This is an important level for the bears to defend as a break and close above it could indicate that a bottom may be in place.
BNB/USDT daily chart. Source: TradingView
Above the 20-day EMA, the BNB/USDT pair could rally to $350 and thereafter the 50-day SMA ($376). This level could act as a stiff hurdle again, but if bulls push the price above it, the pair could rally to the 200-day SMA ($451).
Contrary to this assumption, if the price turns down sharply from the 20-day EMA, it will indicate that the bears are not yet giving up and will continue selling from higher levels. The pair could then drop towards $211. If the price bounces off this level, the pair could consolidate between $211 and $320 for a few days.
BNB/USDT 4 hour chart. Source: TradingView
The bulls are attempting to push the price above the overhead resistance at $320. If they succeed, the pair could rally towards $350. The bears are likely to defend this level aggressively. If the price turns down from $350, the pair could drop back down to $320.
If the price bounces off this level, the pair could remain range bound between $320 and $350 for some time. Bullish momentum could pick up above the 200-SMA and the pair could rally to $380 and later to $400.
Conversely, if the price turns down from the current levels, the pair could drop to $286 and then $272.
XMR/USDT
Monero (XMR) broke below the strong support at $134 on May 12, but the bears failed to sustain the lower levels. This suggests aggressive buying on dips. The price has strongly recovered to the 20-day EMA ($179).
XMR/USDT daily chart. Source: TradingView
If bulls push and sustain the price above the 20-day EMA, the XMR/USDT pair could scale the overhead resistance zone between the 200-day SMA ($202) and the 50-day SMA ($212). . Bears are expected to build strong defenses in this zone
If the price turns down from this zone but the bulls halt the subsequent decline at the 20-day EMA, it will signal a potential reversal. Conversely, if the price turns down from the current level, the bears will attempt to drag the pair to $150 and then $134.
XMR/USDT 4 hour chart. Source: TradingView
The 4-hour chart shows formation of higher lows and higher highs. The bears attempted to pull the price below the 50-SMA, but the bulls successfully defended the level. This indicates a switch in sentiment from selling on rallies to buying on dips.
The pair could rally to the 200-SMA next, where the bears could offer stiff resistance. If the bulls clear this barrier, the pair could rally to $225. Contrary to this assumption, if the price turns down and breaks below the 50-SMA, the pair could drop to $150. A break below this level could challenge the strong support at $134
Related: Dollar Cost Averaging or Lump Sum: Which Bitcoin Strategy Works Best Regardless of Price?
ETC/USDT
Ethereum Classic (ETC) fell sharply from $52 on March 29th to $16 on May 12th. The bulls are attempting to initiate a rally that could face resistance at the 20-day EMA ($23).
ETC/USDT daily chart. Source: TradingView
If the price turns down from the 20-day EMA, the bears will try again to extend the downtrend by dragging the ETC/USDT pair below the critical $16 support.
On the contrary, if buyers push the price above the 20-day EMA, it will indicate the start of a stronger recovery rally. The positive divergence on the RSI also points to the possibility of a near-term recovery. The pair could then rally to the 38.2% Fibonacci retracement level at $30 where the bears could mount a stiff resistance.
ETC/USDT 4 hour chart. Source: TradingView
The price has been trading between $19 and $23 for a while. This suggests that the bulls are trying to make a higher low, but the bears continue to present a strong challenge at higher levels. The flattening 20-EMA and 50-SMA do not provide a clear advantage for either bulls or bears.
If buyers push the price above $23, it will indicate the start of a new upward move. The pair could rally to the 200-SMA first and then $33. Alternatively, if the price turns down and falls below $19, the bears will prevail. They will then try to take the pair down to $16.
MANA/USDT
Decentraland (MANA) turned down from the 20-day EMA ($1.24) on May 16, but a positive sign is that the bulls have not allowed the price to sustain below the psychological $1 level.
MANA/USDT daily chart. Source: TradingView
The buyers will try again to push the price above the 20-day EMA. If successful, the MANA/USDT pair could rally to the 50-day SMA ($1.72). The bears may have renewed strong resistance at this level, but if the bulls clear this hurdle, the pair could begin its northward march towards the 200-day SMA ($2.72).
Contrary to this assumption, if the price breaks below $1, the bears will attempt to sink the pair to the key support at $0.60. A break and close below this level could start the next leg of the downtrend.
MANA/USDT 4 hour chart. Source: TradingView
The pair is stuck between $0.97 and $1.36, suggesting that bulls are buying dips below $1 and bears are selling on rallies. The 20-EMA and 50-SMA have flattened out, suggesting that the consolidation could continue for some time.
If buyers push the price above the 50-SMA, the pair could rally to range resistance at $1.36. Bullish momentum could increase if buyers clear this barrier. Conversely, if the price turns down and breaks below the $0.97 support, the bears could gain the upper hand.
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.
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