Cryptocurrency markets and US equity markets witnessed profit taking this week as macroeconomic data suggested continued rate hikes by the Federal Reserve. Bitcoin (BTC) is down more than 4% and the S&P 500 is down 2.7% to record its worst week of the year.
The CME FedWatch Tool shows a 73% probability of a 25 basis point rate hike by the Fed at the March meeting, but after higher-than-expected inflation readings in two weeks, the probability of a 50-point hike basis on the rate began to decline slowly Gain strength.
During periods of uncertainty, some currencies enter a deeper correction, while some buck the trend and continue to outperform the markets. Therefore, it becomes important to select the right currencies to trade.
A few coins that witnessed a shallow correction or bounced heavily off support have been selected from this list. Let’s look at your charts and determine the levels to watch.
BTC/USDT
Bitcoin dipped below the 20-day exponential moving average ($23,391) on Feb. 24, but the bears failed to capitalize on this advantage and sustain the price below the strong support at $22,800.
The price rebounded from $22,800 on Feb 25 and the bulls are trying to push the price above the 20-day EMA. If they manage to do this, it would indicate that the BTC/USDT pair could consolidate between $25,250 and $22,800 for a few days.
The flattening of the 20-day EMA and the relative strength index (RSI) near the midpoint also suggest range-bound action in the near term.
Alternatively, if the price dips below the $22,700 level, selling could intensify and the pair could plummet to the next strong support at $21,480.
The 20-EMA is down on the 4-hour chart and the RSI is in negative territory. This indicates an advantage for the bears. Sellers will try to protect the 20-EMA, and if the price turns down from this level, the probability of a break below $22,800 increases. If that happens, selling could intensify and the pair could drop to $21,480.
On the contrary, if the price breaks above the 20-EMA, it will suggest that bulls are buying on dips. This could push the pair towards the 50 simple moving average and keep the price trapped within the range for a while longer.
LDO/USDT
The Lido DAO (LDO) did not hold below the 20-day EMA ($2.75) during the recent correction, which is a positive sign. Another bullish sign is the formation of the pennant near the local highs.
The bulls will try to propel the price above the pennant’s resistance line. If successful, the LDO/USDT pair can initiate the next leg of the upward movement. The pair can first rally to $3.90 and then attempt a rally to $4.24.
On the other hand, if the price turns down from the resistance line, it will suggest that the bears are selling on rallies. This could keep the price within the pennant for a while longer. The bears will have to drive price below the pennant if they want to signal a short-term trend reversal.
The strong rebound from the pennant’s support line indicates aggressive buying on dips. Buyers will have to overcome the obstacle at the resistance line to regain control. If they do, the pair could resume its uptrend.
However, the bears are likely to have other plans as they will try to protect the resistance line. If the price turns down from this level, the equilibrium state may continue for some time.
A break below the pennant can attract profits from short-term traders. This can pull the price to $2.20 and then to $2.
EGLD/USDT
MultiversX (EGLD) has turned down from the resistance line, but an encouraging sign is that the bulls are trying to defend the 20-day EMA ($47).
Both moving averages are sloping up and the RSI is above 54, indicating that the bulls have a slight upper hand. The bulls will try to push the price towards the resistance line, where they will likely face strong opposition from the bears.
This bullish view could invalidate in the short term if the price turns down and falls below the 20-day EMA. This will indicate selling by the bears on all minor rallies. The EGLD/USDT pair can then drop to the 50-day SMA ($44) and subsequently to $40.
The 4-hour chart shows that the price is falling within a descending channel pattern. Buyers bought at lower levels and pushed the price towards the resistance line of the channel. If this resistance gives way, the pair could rally to the 50-SMA and later attempt a retest of the strong barrier at $54.
On the contrary, if the price turns down from the resistance line, it will suggest that the bears have not given up. This could result in a drop towards the support line of the channel.
Related: How does the US dollar index (DXY) affect cryptocurrencies? Observe Macromarkets
THETA/USDT
The bulls are trying to stop the Theta Network (THETA) pullback from the 20-day EMA ($1.15). Both moving averages are sloping up and the RSI is in the positive territory, indicating an advantage for the bulls.
If the buyers push the price above the downtrend line, THETA/USDT could rise to the overhead resistance at $1.34. This is a formidable resistance and a break above it could open the door for a possible rise to $1.70.
Instead, if the price turns down and dips below the 20-day EMA, it will suggest that short-term bulls might be rushing for an exit. This could initiate a deeper correction towards the 50-day SMA ($1.05) and then towards the psychological support at $1.
The 4-hour chart shows the formation of a symmetrical triangle pattern. Both moving averages have flattened out and the RSI is hovering near the center, indicating a balance between supply and demand.
A break below the triangle could tip the short-term advantage in favor of the bears. The pair can first drop to $1.12 and then to $1.
If the bulls want to avoid the drop, they will have to quickly drive the price above the triangle. This could start a journey to $1.27 and then to $1.30.
KLAY/USDT
Klaytn (KLAY) is trying to break out of a base pattern. The price has rebounded from the 20-day EMA ($0.26) on Feb 25, indicating solid buying on dips.
The bulls will try to pierce the overhead resistance at $0.34. If they do, the KLAY/USDT pair could pick up momentum and move up to the psychological resistance at $0.50. Such a move will signal a possible trend change.
If the price turns down from $0.34, it will indicate that the bears are fiercely protecting the level. This could drive the price down to the 20-day EMA again. A break below this level could indicate that the pair may spend some more time in the base pattern.
The bulls halted the pullback near the 61.8% Fibonacci retracement of $0.26 and started a recovery. There is minor resistance at $0.32, but if this level is breached, the pair could attempt a rally to $0.34 and later to $0.37.
On the other hand, if the price turns down from the overhead resistance, it will suggest that the bears are selling on rallies. This could add to the prospects for a break below $0.26. If that happens, the pair can drop to $0.22.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.