Bitcoin could consolidate for a few more days, but some altcoins formed reversal patterns that could lead to a trend movement.
Investors are worried about the stability of the cryptomoney market after facing a series of bad news in recent days.
Fortunately, the markets have matured so much that the negative news no longer has as great an impact on the price as it did in the early days of the crypto currencies.
The current stability shows that institutional investors do not view the recent KuCoin hack, the CFTC and Justice Department charges against BitMEX, or even the fact that US President Donald Trump has been diagnosed with a coronavirus, as events serious enough to cause the cryptomoney market to collapse.
Therefore, there was no panic settlement in Bitcoin (BTC) futures after this news was released and open interest remained stable.
In an upward trend, traders are using price weakness caused by knee-jerk reactions to increase their positions. If Bitcoin continues to hold above the psychologically critical level of USD 10,000, more investors may consider adding it to their portfolios.
Despite Bitcoin’s sideways price action, some altcoins are continuing their upward trend and others are showing signs of a possible trend reversal.
Let’s take a look at the charts for the top 5 crypt currencies to see what critical levels may indicate the start of a trend movement.
The long-term trend in Bitcoin is upward, as the 200-day simple moving average (USD 9,448) is rising. However, in the short term, the flat 20-day exponential moving average (USD 10,682) and the Relative Strength Index (RSI) near the midpoint suggest that there is a balance between supply and demand.
The BTC/USD is currently trading between USD 9.835 and USD 11.178 over the past few days. A break above or below this range could initiate a trend reversal.
Between May and July, the pair was stuck in a narrow range for almost 80 days and the current consolidation completed about 30 days.
If history repeats itself then the price could remain within a limited range for a few more days. Therefore, traders must be patient until the price breaks above or below this range.
A break above USD 11.178 could initiate a run with the first target set at USD 12.460, while a break below USD 9.835 and the 200 day SMA could intensify sales as traders rush to dump their positions.
The 4-hour chart shows that the price is trading within a large symmetrical triangle. A break between half and three-quarters of the distance from the base of the triangle to the apex is considered possible.
Therefore, bullish and bearish traders could attempt a breakout of the triangle in the next few days. However, if this does not happen and the price reaches the apex of the triangle, the pattern will be invalidated.
Cardano (ADA) closed (UTC time) below the 200-day SMA (USD 0.0837) on 23 September, but the bears were unable to sustain the lower levels, and the high once again rose above the long-term moving average on 24 September.
This suggests that the bulls are aggressively defending the 200-day SMA. Price action over the past few days shows a possible formation of a reverse head and shoulder pattern that will be completed with a breakout and close (UTC time) above the neck.
The target for this configuration is USD 0.1331. This bullish point will come into play only after the price leaves the neck.
Contrary to this assumption, if the ADA/USD falls from the current level or from the neckline and falls below the 200-day simple moving average, it will invalidate the pattern. This could attract a large number of sales with the next support level at USD 0.050.
The 4-hour chart shows that the bulls are struggling to push the price above the upper resistance level of USD 0.1040440. This shows that sellers are selling in the rally to this resistance.
The declining moving averages and Immediate Edge within the negative territory suggest that the bearishers have a very small short term advantage. If the price falls below USD 0.0898, the bearishers will attempt to push the price down to the critical support level of USD 0.074.
Conversely, if the bulls can push and hold the price above the moving averages, a move towards USD 0.1040440 and then into the pattern’s neck is possible.
Monero (XMR) broke through the upper resistance level of USD 97.70 on September 29th and the new breakout level test was successful on October 2nd. This shows that the level that previously acted as a rigid resistance now acts as a strong support.
The rising 20 day EMA (USD 97.15) and the RSI in positive territory suggest that the path of least resistance is upwards. The first target is USD 113,211 and above that is USD 121,427.
It is likely that momentum will be restored if the upside can take the price above this level and the next target is USD 140.
This positive viewpoint will be invalidated if the XMR/USD falls from its current levels to below USD 93. Such a move could take the price down to the 200-day SMA at USD 71.79.
The 4-hour chart shows that the pair has been trading largely within one channel for the past few days. Although the price broke above the channel, the upside was unable to sustain the higher levels and the pair fell to the channel support line.
However, the rebound over the support line has been strong and the bulls are once again trying to push the price above the channel. If they have their way, they could regain momentum.
Contrary to this assumption, if the price fails to exit the channel, a gradual upward movement is possible. The first sign of weakness will be a break under the channel.
Cosmos (ATOM) is showing signs of a possible reversal, as it formed a reverse pattern of head and shoulders that will be completed in a break and close (UTC time) above the neck.
This configuration has its target set at USD 7.4 and if this level is crossed, the upward movement can again test the highs at USD 8,877.
However, the 20-day EMA (USD 5) is currently flat and the RSI is just above the mid-point, suggesting that there is a balance between supply and demand. Therefore, traders can wait for the price to rise above the neck before going bullish.
If the ATOM/USD falls from the neck, a drop to USD 4.50 and below the 200-day SMA (USD 3.675) could occur.
The 4-hour chart shows that the bulls bought during the drop to the Fibonacci retracement level of 50% of the increase from USD 3.78 to USD 5.596. Buyers are now trying to get the price back above USD 5,596.
If they manage to break through and hold it, the reverse head and shoulders pattern will be completed.
This bullish view will be void if he turns from his current levels or from the upper resistance and falls below the 61.8% retracement level of USD 4,474.
The bulls have been defending the USD 0.01094 support for the last few days, but are unable to hold the higher levels, this suggests that the bears are selling during the bulls. Therefore VeChain (VET) fell back to the USD 0.01094 support.
If the bearish move of the VeChain/USD below USD 0.01094 support and the 200-day SMA (USD 0.0104), then selling is likely to intensify and a drop to USD 0.008 and below it to USD 0.0066 is likely to occur.
The 20-day EMA (USD 0.0128) is tilting downward and the RSI has failed to hold above the 50 level, suggesting that the bears are in the lead.
This negative view will be invalidated if the pair rebounds off the support level and rises above USD 0.0160. Such a move will suggest accumulation by the bulls at the lower levels.
The 4-hour chart shows the formation of a descending triangle, which will be completed with a breakout and close (UTC time) below USD 0.010940. This setting is aimed at USD 0.00328.
Declining moving averages and RSI in the negative zone suggest that the short term advantage lies with the bearish side.