A rocky road lies ahead, but here are 5 altcoins that still look bullish
US stock markets plunged on August 26 following Federal Reserve Chairman Jerome Powell’s speech in which he reiterated the central bank’s hawkish stance. Continuing its correlation with the equity market, Bitcoin (BTC) and cryptocurrency markets also saw a strong sell-off on August 26.
Bitcoin is down around 14% this month, making it the worst August performance since 2015, when the price fell 18.67%. This may be bad news for investors as September has a dubious record of an average loss of 6% since 2013, according to data from CoinGlass.
Although buying in a bear market is not a good strategy, traders can keep a close eye on cryptocurrencies that are outperforming the markets because, in the event of a reversal, they will likely be the first to exit the block. In a bearish market, traders should be patient as they are very likely to find many buying opportunities after the market stabilizes.
What are the critical levels to watch out for in Bitcoin? If it stages a reversal, which cryptocurrencies could outperform in the short term? Let’s study 5 cryptocurrencies that look strong on the charts.
BTC/USDT
A weak bounce off strong support indicates that the bulls are reluctant to buy aggressively at the level. The bulls successfully defended the support line for several days but were unable to push the price above the 20-day exponential moving average ($21,806). This shows a lack of demand at higher levels.
The bears jumped at the chance and pulled the price below the ascending channel on August 26th. The 20-day EMA is falling and the RSI is near the oversold zone, indicating that the bears are firmly in control.
The BTC/USDT pair could drop to the strong support zone between $18,910 and $18,626. If the price bounces out of this area, the bulls will attempt to push the price above the 50-day simple moving average ($22,340). If they succeed, the pair could hit $25,211.
Conversely, if the price breaks below $18,626, the pair could retest the June 18 intraday low at $17,622. The bears will need to drive the price below this level to signal the resumption of the downtrend.
The descending moving averages on the 4-hour chart indicate that the bears are in control, but the positive divergence on the Relative Strength Index (RSI) suggests that selling pressure may be easing.
The first sign of strength will be a rise above the 20-EMA. If this happens, the pair could reach the 50-SMA. A break above this level could signal that the correction may be over.
On the contrary, if the price breaks below $19,800, the selling could accelerate and the pair could drop to the $18,910-$18,626 area.
MATIC/USDT
Polygon (MATIC) bounced off its strong support, showing that the bulls are aggressively defending the level. This increases the likelihood that the beach-related action will continue for a few more days. This is one of the reasons to focus on this altcoin.
Bulls attempt to push the price above the moving averages. If they can achieve this, it will suggest that the MATIC/USDT pair could attempt a rally towards the overhead resistance at $1.05. This level could attract strong selling by the bears.
Alternatively, if the price is falling from the moving averages, it will suggest that the bears are selling on rallies. The bears will then attempt to drive the price down below the crucial support at $0.75. If they succeed, the pair could drop to $0.63.
The bulls pushed the price above the moving averages, which is the first indication that the selling pressure may be easing. Another positive sign is that the RSI has made a positive divergence, a sign that the bears may be losing their grip.
The buyers will try to push the price above the broad resistance at $0.84. If successful, the pair could rally back to $0.91, which again could act as strong resistance. To invalidate this positive view, the bears will have to drive the price down below $0.75.
ATOM/USDT
Cosmos (ATOM) was picked as it is trading above the 50-day SMA ($10.58) and is close to the psychological support at $10.
The bulls should aggressively defend the area between $10 and the 50-day SMA. If the price bounces out of this area and breaks above the 20-day EMA ($11.39), it will indicate that the selling pressure may be easing.
The ATOM/USDT pair may then reach the overhead resistance at $12.50 and later at $13.45. A break above this level could suggest that the downtrend may be over.
Contrary to this assumption, if the price turns down and slides below the support zone, it could trigger a deeper correction. The pair could then drop to $8.50.
The 20-EMA has fallen on the 4-hour chart and the RSI is in negative territory, indicating that the bears have the short-term advantage. Sellers will need to sink and hold the price below the uptrend line to challenge the psychological support at $10.
Conversely, if the price bounces off the uptrend line, it will suggest that the bulls are buying the dips at that level as they have on other occasions. Buyers will need to push the price above the moving averages to open the doors for a possible rally to $12.50.
Related: Bitcoin Threatens 20-Month Low Monthly Close With BTC Price Below $20,000
XMR/USDT
Monero (XMR) made it to the list as it holds above its immediate support at $142. This suggests that the lower levels are attracting buyers.
If the bulls push the price above the 20-day EMA ($153), it will suggest that the correction may be over. The XMR/USDT pair could gain momentum if the bulls push the price above the broad resistance at $158. If that happens, the pair could rally to $174. Bulls will need to clear this hurdle to signal the resumption of bullish movement.
This positive view could be invalidated in the short term if the price turns down and breaks below the strong support at $142. If that happens, the pair could slide to $132 and later to $117. The downward sloping 20-day EMA and the RSI in negative territory indicate that the bears have a slight advantage.
The buyers are trying to push the price above the 20-EMA. If they succeed, the pair could reach the 50-SMA, which again could act as stiff resistance. If the bulls overcome this barrier, the pair could reach $158. A breakout and close above this resistance will suggest a change in the short-term trend.
Conversely, if the price is falling from the 20-EMA, it will suggest that the bears are selling on minor rallies. The pair could then decline to the strong support at $142. If this support cracks, it will suggest the start of a deeper correction.
CHF/USDT
Chiliz (CHZ) has found a spot on this list for the third week in a row. Indeed, even after the recent correction, it remains in an uptrend.
The buyers pushed the price above the general resistance of $0.26 on August 23-24, but they were unable to sustain the higher levels, as seen by the long wicks on the candlesticks. This may have tempted short-term traders to book profits. This drove the price down to the breakout level of $0.20, which is just above the 20-day EMA ($0.20).
The bulls have bought this dip and are trying to resume the rise towards the overhead resistance at $0.26. The bulls will need to clear this hurdle to open the doors for a possible rally to $0.33.
The rising moving averages suggest an advantage for buyers, but the negative divergence on the RSI indicates that the bullish momentum may be weakening. If the price declines and falls below the 20-day EMA, the advantage will turn in favor of the bears. The pair could then decline to the 50-day SMA ($0.15).
The 20-EMA on the 4-hour chart is flattening and the RSI is hovering near the midpoint, indicating a balance between buyers and sellers. This could keep the pair in a range between $0.20 and $0.26 for some time.
The next trend move could begin if the bulls push and hold the price above $0.26 or below $0.20. Until then, the bulls are likely to buy the dips from the support at $0.20 and sell near the overhead resistance at $0.26. Trading inside the range should remain volatile and random.
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.
