The rally in altcoins is likely to continue if Bitcoin holds at its
current levels but a breakdown below $9,000 could lead to aggressive
profit booking by altcoin traders.
At various points throughout 2020 Bitcoin (BTC) was correlated with gold. During these phases BTC was acting as an uncorrelated asset, but now it has become highly correlated to the S&P 500.
This suggests that the top-ranked cryptocurrency
on CoinMarketCap has been finding acceptance among various groups of
traditional investors during different stages of the current coronavirus
pandemic induced economic crisis.
Crypto market data daily view. Source: Coin360
Bitcoin’s volatility has dropped in the past few days but select altcoins have been rallying sharply, prompting analysts to predict that a new altcoin season has arrived.
If
Bitcoin shakes out from its slumber and rallies higher, it is likely to
be a positive sign and several altcoins may continue to outperform BTC.
However, if the volatility expands to the downside, it could result in
profit booking in several altcoins. Therefore, traders should keep a
close watch on Bitcoin’s price.
BTC/USD
Bitcoin’s (BTC)
volatility has dropped sharply as it has been trading inside the
$8,900–$9,500 range since June 25. This volatility squeeze is likely to
end soon with a sharp breakout in either direction.
BTC/USD daily chart. Source: TradingView
If
the bulls can propel the price above $9,500, it is likely to attract
buying by traders who have been waiting on the sidelines for a trending
move to start. When the price breaks out after a tight consolidation, it
is likely to pick up momentum.
The bears might attempt
to stall the up move at the $10,000–$10,400 zone but the possibility of a
breakout is high. A close (UTC time) above the long-term downtrend line
of the symmetrical triangle will be a huge positive and it will
indicate the likelihood of a new sustained uptrend.
Currently,
both moving averages are flat and the relative strength index is close
to the 50 level, which suggests a balance between supply and demand. As
the charts are not indicating an advantage to either the bulls or the
bears, it is better to wait for the breakout to happen before jumping
in.
If the bears sink the BTC/USD pair below $8,900, a
drop to $8,130.58 is likely. Although there is a minor support at
$8,628, it is unlikely to hold.
BTC/USD 4-hour chart. Source: TradingView
The
4-hour chart shows that the price is stuck close to the middle of the
$8,900–$9,500 range. Both moving averages are flat and the RSI is also
close to the midpoint, suggesting a state of equilibrium between buyers
and sellers.
The first sign of strength would be if the
bulls can sustain the price above $9,300. Above this level, a retest of
$9,500 is likely. Conversely, if the bears sink the price below $9,100, a
retest of $8,900 is possible.
LINK/USD
Chainlink (LINK)
broke above the critical overhead resistance of $4.9762 on July 6 and
embarked on a strong up move. While a retest of the breakout level
usually happens, some times, when the breakout is too strong, the price
only consolidates for a few days and then resumes the up move.
LINK/USD daily chart. Source: TradingView
After consolidating for the past three days, the 12th-ranked
cryptocurrency on CoinMarketCap has broken out of $6.5782. If the bulls
can close (UTC time) the price above this level, the next leg of the
uptrend is likely to resume.
The target objective on the
upside is $7.6693 and if this level is also crossed, a move to $8.5446
is likely. Both moving averages are sloping up and the RSI is in the
overbought territory, suggesting that bulls have the upper hand.
This
bullish view will be invalidated if the price fails to sustain above
$6.5782. Such a move will indicate profit booking at higher levels and
could result in a correction to the 20-day exponential moving average
($5.37).
LINK/USD 4-hour chart. Source: TradingView
The
bulls have pushed the price above $6.5782, which suggests strong demand
at higher levels. Both moving averages are sloping up and the RSI is in
the overbought territory, which suggests that bulls have the upper
hand.
On the downside, the first support is at $6.5782
and if that breaks, the buyers are likely to defend the 20-EMA. If the
price rebounds off this support, it is likely to resume its up move once
again. A break below the 20-EMA will be the first sign of weakness.
ATOM/USD
Cosmos (ATOM)
broke above the overhead resistance at $3.20 on July 7. That attracted
aggressive buying and the altcoin quickly rallied to $4.466, suggesting
the start of a new uptrend.
ATOM/USD daily chart. Source: TradingView
After
the sharp rally of the past few days, the RSI has risen deep into the
overbought territory, suggesting that a minor pullback of one to three
days is possible. However, as the trend is up, any dip is likely to
offer a buying opportunity.
The first support on the
downside is $3.634 and the next support is $3.377, which are the 38.2%
and 50% Fibonacci retracement levels of the most recent rally. In a
strong uptrend, usually, the bulls do not allow the price to dip below
this support zone.
If the 21st-ranked
cryptocurrency on CoinMarketCap bounces off this support zone, the
bulls will attempt to resume the uptrend. The target level to watch on
the upside is $5.10 and then $5.423. This bullish view will be
invalidated if the bears sink the price below $3.20.
ATOM/USD 4-hour chart. Source: TradingView
The
4-hour chart suggests some profit booking at higher levels. However,
the bulls have not allowed the price to dip below the 20-EMA during this
leg of the up move. Hence, this becomes an important level to watch out
for.
If the ATOM/USD pair rebounds off the 20-EMA, the
bulls will once again attempt to resume the up move. Conversely, if the
bears sink the price below the 20-EMA, a drop to the 50-simple moving
average is possible.
XLM/USD
Stellar Lumens (XLM)
has formed a complex inverse head and shoulders pattern, which
completed on a break above the neckline at $0.088777. This bullish setup
has a target objective of $0.151491 but the bears are likely to mount a
stiff resistance at $0.13 and then again at $0.14.
XLM/USD daily chart. Source: TradingView
However, the failure to pick up momentum following the breakout of the neckline is a mild negative. The 14th-ranked cryptocurrency
on CoinMarketCap has been facing stiff resistance closer to $0.101360,
which shows that the bears are aggressively defending this level.
If
the price again dips back below $0.088777 and breaks below $0.082669,
it will suggest that the current breakout was a bull trap.
Conversely,
if the bulls defend the breakout level of $0.088777 and push the price
above $0.101360, the momentum is likely to pick up.
XLM/USD 4-hour chart. Source: TradingView
The
long wicks on the candlesticks (marked via ellipse on the chart) where
the price nears $0.10 level shows aggressive selling by the bears. The
bearish divergence on the RSI also points to a possible correction.
If
the price bounces off the $0.088777 support, the bulls will make
another attempt to propel the XLM/USD pair above $0.101360. A close (UTC
time) above this level will signal the start of a new uptrend.
This
bullish view will be invalidated if the bears sink the price below
$0.088777. If this support breaks down, it will indicate weakness.
BNB/USD
Binance Coin (BNB)
has been range-bound between $18.20–$13.9129 for about three months.
Today, the bulls had pushed the price above the resistance of the range
but they have not been able to sustain the breakout.
BNB/USD daily chart. Source: TradingView
This
suggests that the bears are aggressively defending the resistance of
the range. However, if the bulls do not give up much ground, the buyers
are likely to make another attempt to scale the price above the range.
If they succeed and the ninth-ranked cryptocurrency
on CoinMarketCap closes (UTC time) above $18.20, it is likely to start a
new uptrend that can rally to the next resistance at $21.7628.
The
20-day EMA ($16.5) has started to turn up and the RSI is close to the
overbought zone, which suggests that the bulls have the upper hand. This
bullish view will be invalidated if the bears sink the price below the
moving averages.
BNB/USD 4-hour chart. Source: TradingView
The
4-hour chart shows that the BNB/USD pair had broken above the overhead
resistance at $18.20 but the bulls could not hold on to the higher
levels. This suggests that the bears are attempting to defend the
resistance of the range. The bearish divergence on the RSI suggests that
the upward momentum is weakening.
However, if the pair
bounces off the 20-EMA, the bulls will make one more attempt to break
above the $18.20–$18.59 zone. If they succeed, it will signal strength
and will increase the likelihood of the start of a new uptrend.
Conversely, if the bears sink the price below the 20-EMA, it will signal that the breakout was a bull trap.
source link : https://cointelegraph.com/news/top-5-cryptocurrencies-to-watch-this-week-btc-link-atom-xlm-bnb
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