Bitcoin (BTC) soared from $29,482.61 on July 21 to $40,000 today, its highest level since June 16. This sharp rebound shows a possible change in sentiment.
The bulls received a boost on Sunday, following the news from an anonymous source within Amazon proclaiming that the company is planning to accept Bitcoin payments by the end of 2021 and is exploring the launch of its own cryptocurrency by 2022.
This news seems to have sent the bears scurrying to the exit, resulting in a short squeeze. Data from Bybt shows about $1.1 billion of liquidations in 24-hours on Monday, the most since May 18. The intensity of the squeeze was such that “$111,000,000 of shorts liquidated in 10 minutes” according to analyst William Clemente III.
Although institutional adoption of digital assets is on the rise, some still view crypto only as a speculative asset. Man Group CEO Luke Ellis said that cryptocurrencies are “a pure trading instrument” with “no inherent worth in it whatsoever. It is a tulip bulb.”
Can the bullish sentiment sustain and attract further buyers? Let’s study the charts of the top-10 cryptocurrencies to spot the critical levels on the upside and the downside.
Bitcoin closed above the 50-day simple moving average ($34,396) on July 25, which may have forced the short-term traders to cover their short positions. This could have resulted in a short squeeze today, pushing the price above the overhead resistance at $36,670.
The moving averages are on the verge of a bullish crossover and the relative strength index (RSI) has risen close to the overbought territory, indicating that bulls have the upper hand.
If buyers sustain the price above $36,670, the BTC/USDT pair could rally to the overhead resistance zone at $41,330 to $42,451.67 where they may encounter stiff resistance from the bears.
If bulls arrest the subsequent decline above $36,670, the pair could trade in the upper half of the large trading range between $30,000 to $42,451.67. A break above $42,451.67 will signal the possible start of a new uptrend.
This positive view will invalidate if the price turns down and breaks below the moving averages. If that happens, the pair could retest the $31,000 to $28,000 support zone.
Ether (ETH) struggled near the $2,200 level for the past two days but the long tail on the July 25 candlestick suggests that bulls purchased the dip. Sustained buying by the bulls has pushed the price above the $2,200 level today.
The ETH/USDT pair could rally to the downtrend line, which may again act as a stiff resistance. If the price turns down from this resistance but rebounds off the 20-day EMA ($2,081), it will indicate a change in sentiment. That will improve the prospects of a break above the downtrend line.
A breakout and close above the downtrend line will clear the path for a possible rally to the psychological resistance at $3,000. This bullish view will invalidate if the price turns down and breaks below the 20-day EMA. Such a move will suggest that the bears have not given up and continue to sell on rallies.
The bulls have pushed Binance Coin (BNB) above the downtrend line and are now attempting to clear the hurdle at the 50-day SMA ($314).
The 20-day EMA has flattened out and the RSI has risen into the positive territory, indicating that the bulls are attempting a comeback. If they can sustain the price above the 50-day SMA, the BNB/USDT pair may soar to $380 and later to $433.
On the contrary, if the price turns down from the current level, the bears will try to sink the pair back below $280. If they manage to do that, the pair could continue its down move and retest the July 20 low at $254.52.
The long tail on Cardano’s (ADA) candlestick on July 25 showed that bulls were buying the dips rather than closing their positions near the 20-day EMA ($1.24). The momentum picked up today and bulls have propelled the price above the moving averages.
If bulls sustain the price above the 50-day SMA ($1.34), the ADA/USDT pair could rise to the downtrend line. This level could act as stiff resistance but if the bulls arrest the next decline above the 20-day EMA, it will enhance the prospects of a break above the downtrend line.
If that happens, the pair could rally to $1.63 and then to $1.88. On the other hand, if the price turns down from the current level and slides below the 20-day EMA, the pair could drop to $1.14 and then to $1.
XRP’s rebound had stalled near the 20-day EMA ($0.61) for the past three days but the bulls did not dump their positions. Renewed buying has pushed the price above the 20-day EMA today.
The 20-day EMA has flattened out and the RSI has risen above 54, indicating that bears are losing their grip. If bulls drive the price above the 50-day SMA ($0.68), the XRP/USDT pair could rise to $0.75.
A breakout and close above $0.75 will complete a double bottom pattern, which could open the doors for a rally to $1.07. Contrary to this assumption, if the price turns down from the current level and breaks below the 20-day EMA, the pair could again drop to the critical support at $0.50.
Although bears defended the 20-day EMA ($0.20) for the past three days, the bulls did not give up much ground. This suggests that bulls were not booking profits as they were anticipating Dogecoin’s (DOGE) relief rally to continue.
The buyers have pushed the price above the overhead resistance at $0.21 today but the bears may not give up easily. The sellers will again try to stall the recovery at the 50-day SMA ($0.24). If the price turns down from this level, the bulls will attempt to flip $0.21 into support.
If they succeed, the possibility of a break above the 50-day SMA increases. Such a move could open the doors for a likely rally to $0.28 and then to $0.33. Conversely, if bears pull the price below the 20-day EMA, the DOGE/USDT pair could again drop to $0.15.
The bears tried to stall Polkadot’s (DOT) relief rally at the 20-day EMA ($13.92) for the past three days but they could not pull the price back below the $13 level. This shows that bulls were buying on every minor dip.
The bulls have pushed the price above the 20-day EMA today and the DOT/USDT pair could now rally to the overhead resistance at $16.93. This level may act as stiff resistance and if the price turns down from it, the pair could again drop to $13.
On the contrary, if bulls drive the price above $16.93, it will suggest that the markets have rejected the lower levels. The pair could then start its northward march to $20 and later to the stiff overhead resistance at $26.50.
Uniswap’s (UNI) recovery has reached the downtrend line of the descending triangle pattern where bears may mount a stiff resistance. If the price turns down from this level and breaks below the 20-day EMA ($18.17), it will suggest that bears are aggressively selling at higher levels.
The RSI has climbed into the positive territory and the 20-day EMA has flattened out, suggesting that the selling pressure is reducing. If bulls push and sustain the price above the downtrend line, the bearish pattern will be invalidated.
That could attract further buying, opening the doors for a rally to $25. If bulls can clear this hurdle, the UNI/USDT pair could rally to $30 where bears may pose a stiff challenge.
After struggling near the 20-day EMA ($465) for the past two days, Bitcoin Cash (BCH) has resumed its recovery today. The altcoin could now rise to the overhead resistance at $538.11 where the bears may mount a stiff resistance.
The RSI has risen above 55 and the 20-day EMA has flattened out, suggesting a balance between supply and demand. A breakout and close above $538.11 will tilt the advantage in favor of the bulls as the BCH/USDT pair will complete a double bottom pattern.
This bullish setup has a target objective at $706.22. Alternatively, if the price turns down from $538.11, the pair may drop to the 20-day EMA. If the price rebounds off this level, the bulls will again try to push the price above the overhead resistance. A break below the 20-day EMA could pull the price to $370.
The bears attempted to stall Litecoin’s (LTC) relief rally near the 20-day EMA ($127) for the past two days but the bulls were in no mood to relent. They held their ground and pushed the price above the 20-day EMA today.
The RSI has risen into the positive zone and the 20-day EMA has flattened out, indicating that bears are losing their grip. If bulls drive and sustain the price above the 50-day SMA ($139), the LTC/USDT pair could attempt a rally to $180.
If the price turns down from the 50-day SMA but does not break below the 20-day EMA, it will suggest that the sentiment has turned positive and traders are buying on dips. The bears will have to sink the price below the 20-day EMA to gain the upper hand.
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.
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.