After an eight-week losing streak, the Dow Jones Industrial Average rebounded sharply last week, closing up 6.2%. However, Bitcoin (BTC) failed to replicate the performance of the U.S. stock market and threatened to draw a red candle for the ninth week in a row.
A positive sign is that Bitcoin whales have been buying into market corrections. The number of Bitcoin whale wallets with balances of 10,000 BTC or more has risen to the highest level since February 2021, according to Glassnode data. The accumulation of whale wallets shows that their long-term view on Bitcoin remains bullish.
Blockware Solutions highlighted that the Mayer Multiple indicator, which compares the 200-day simple moving average to current prices, is “approaching some of the lowest readings on record.” Several other indicators also suggest that Bitcoin is trying to bottom out, the company said.
If Bitcoin begins to recover in the short term, certain altcoins may follow it higher. Let’s examine a chart of the top 5 cryptocurrencies that could lead the rescue rally.
Bitcoin remains stuck in a tight range between the downtrend line and support at $28,630. Bears pulled the price below $28,630 on May 26 and May 27, but were unable to sustain lower levels. This led to the rally on May 28.
The bulls will now try 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 pick up momentum and the rally could reach the 50-day SMA ($35,181).
A positive divergence on the Relative Strength Index (RSI) suggests that bearish momentum may be fading and a rebound may be imminent.
On the other hand, if the price turns back from the overhead resistance, the bears will once again try to pull the pair below $28,630. If they manage to do so, 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 are flattening out and the RSI is just above the midpoint, suggesting a balance between supply and demand.
If the bulls push the price above the downtrend line, the negative descending triangle pattern will be negated. This can lead to a short squeeze, as short-term shorts may close their positions. This could clear the way for a possible rally to the 200 SMA.
Conversely, if the price turns down and sinks below $28,630, the bears will stand out. This could lead to a retest of the key support at $26,700.
Ethereum (ETH) has been in a downtrend, but the bulls are trying to stop the decline at the key support at $1,700. Prices bounced off this support on May 28 and the bulls are trying to build on the May 29 recovery.
The RSI is forming a bullish divergence, indicating that the downtrend may be weakening. 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. The bears are expected to aggressively defend this level. If the price turns back from this resistance, the pair is likely to remain range-bound between $2,159 and $1,700 for a few days.
On the other hand, if the price turns down from the current levels or the 20-day EMA, the bears will try again to sink the pair below $1,700. If successful, the pair could resume its downtrend with the next major support at $1,300.
The rally from the $1,700 support has reached the 20-day EMA, where the bears are likely to mount a strong defense. If the price pulls back from this level, it could strengthen the outlook for a break below $1,700. If this happens, the downtrend may resume.
Conversely, if the bulls push the price above the 20 SMA, the pair could rise to the 50 SMA. This level could act as resistance again, but if the bulls clear this hurdle, the pair could rally towards 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. Prices retreated below the 20-day EMA on May 26.
The 20-day EMA is flattening out and the RSI is above 46, suggesting that selling pressure is diminishing. If the bulls push the price above the 20-day EMA, the XTZ/USDT pair could rally towards the 50-day EMA ($2.45). If this resistance also gives way, buyers will try to push the price above the uptrend line.
Conversely, if the price turns down from the current levels, it will indicate that the bears continue to defend the 20-day EMA. Sellers will then try to sink the pair below $1.75, which could open the doors for a drop to $1.64.
The 4-hours chart shows that the rally has retraced from the 200-day SMA, but the pair has bounced off the uptrend line. The bulls have pushed the price above the 50-SMA and will now attempt to clear the hurdle above the 200-SMA. If they manage to do this, it will signal the start of a short-term uptick.
Alternatively, if the price turns down from the current levels or the 200 SMA, the pair could fall to the uptrend line. A break and close below this support could pull the price down to $1.61.
Related: Bitcoin hits 9-week losing streak, BTC price drops 22% in May
KuCoin Token (KCS) broke above the 20-day EMA ($15.61) on May 20, but the bulls were unable to push the price above the 50-day SMA ($17.19). This could tempt short-term traders to book profits, allowing prices to retreat below the 20-day EMA on May 26.
The bears were unable to use their advantage to hold the price below the 20-day EMA, which suggests strong buying by the bulls at lower levels. Buyers have pushed prices back above the 20-day SMA on May 29.
If the bulls sustain the price above the 20-day SMA, the probability of a break above the 50-day SMA increases. If that happens, the KCS/USDT pair could rally to $18.44 and then to the 200-day SMA ($19.63).
Contrary to this assumption, if the price declines from current levels, it would indicate that traders are selling on rallies. A break and close below $14.92 could lead to further declines to $12.90.
The pair is facing stiff resistance at the 200 SMA, but a small correction suggests that bulls are buying on a small dip. If the bulls push the price above the 200 SMA, the next stop loss could be $17.14. A breakout and close above this level could start the next rally.
Conversely, if the price turns down from the overhead resistance, the bears could drag the pair down to the 38.2% Fibonacci retracement level of $14.20 and then to the 50% retracement level of $13.30. This area may act as a strong support.
AAVE bounced back to the 20-day EMA ($101) on May 23, but the bulls were unable to push the price higher. This suggests that the bears continue to aggressively defend the level, but the slight positive is that buyers have not given up much ground.
If the price rises and breaks above the 20-day EMA, it will indicate the start of a stronger rally. The AAVE/USDT pair is likely to bounce back to the 50-day SMA ($132) and the bears are likely to strengthen their defenses again.
Alternatively, if the price turns down from current levels or the 20-day EMA and breaks below $89, short-term longs that may have bought at lower levels could close their positions. This could bring the price down to $79 and then to $64.
The 4-hour chart shows that the pair has been fluctuating between $90 and $110 for some time. The 20-EMA and 50-SMA are flat and the RSI is just above the midpoint, suggesting a balance between supply and demand.
If buyers push prices higher and hold above $110, this equilibrium could tilt in favor of buyers. If they do, the pair could rally to $130 and then $143. Conversely, if the price plummets below $90, the bears will have the upper hand. The pair could then drop to $80 and then $70.
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