The decline in the United States equities markets last week extended the market-wide losing streak to three consecutive weeks. The Nasdaq Composite fell for six days in a row for the first time since 2019. The markets negative reaction to a seemingly positive August jobs report suggests that traders are nervous about the Federal Reserve’s future steps and its effects on the economy.
Weakness in the U.S. equities markets pulled Bitcoin (BTC) back below $20,000 on Sept. 2 and bears sustained the price below the level during the weekend. This pulled Bitcoin’s market dominance to just under 39% on Sept. 4, its lowest level since June 2018, according to data from CoinMarketCap.
Crypto market data daily view. Source: Coin360
Although the sentiment remains negative and it is difficult to call a bottom, investors who believe in the long-term prospects of cryptocurrencies could take the opportunity to gradually build positions at lower levels instead of trying to catch the bottom. However, investors could avoid chasing prices higher during bear market rallies and look to buy when the price falls to strong support levels.
If Bitcoin stages a recovery, select altcoins could move higher. Let’s study the charts of top-5 cryptocurrencies that are looking strong on the charts.
Bitcoin has been trading in a tight range between $19,520 and $20,576 for the past few days which shows a balance between the buyers and sellers in the near term. Although bulls are buying on dips, they have failed to overcome the selling at higher levels.
BTC/USDT daily chart. Source: TradingView
The downsloping 20-day exponential moving average ($20,863) and the relative strength index (RSI) in the negative territory indicate advantage to sellers. If bears sink the price below $19,520, the BTC/USDT pair could drop to the strong support zone between $18,910 and $18,626.
This zone is likely to attract strong buying by the bulls as that has been the case on two previous occasions. The bears will have to sink the price below $17,622 to signal the resumption of the downtrend.
On the other hand, buyers will have to push and sustain the price above the 20-day EMA to indicate that the bears may be losing their grip. The pair could then rise to the 50-day simple moving average ($22,271).
BTC/USDT 4-hour chart. Source: TradingView
The price rebounded off the strong support near $19,520 but the bears are attempting to stall the recovery at the moving averages. This shows that bears are selling on every minor rally. If bears sink the price below $19,520, the pair could resume the next leg of the downtrend.
Contrary to this assumption, if bulls thrust the price above the moving averages, the pair could attempt a rally to the resistance of the range at $20,576. Buyers will have to clear this hurdle to signal a potential trend change in the near term.
Cardano (ADA) is in a consolidation but it is attempting to rise above the moving averages. This indicates demand at lower levels and increases the chances of an up-move, which is the reason for its selection.
ADA/USDT daily chart. Source: TradingView
The 20-day EMA ($0.47) has flattened out and the RSI has jumped into positive territory, indicating that the selling pressure is reducing. If buyers sustain the price above the 50-day SMA ($0.50), the ADA/USDT pair could rally to the downtrend line.
This level could again act as a strong resistance but if bulls overcome this barrier, the pair could rally to $0.70.
This positive view could be negated in the short term if the price turns down from the current level and slips below the 20-day EMA. If that happens, the pair could again slide to the strong support at $0.40.
ADA/USDT 4-hour chart. Source: TradingView
The 20-EMA on the 4-hour chart is sloping up and the RSI has risen into the overbought territory. This indicates that bulls are in command but a minor correction or consolidation is possible in the near term.
If buyers sustain the price above $0.48 or the 20-EMA, it will suggest a change in sentiment from selling on rallies to buying on dips. That could push the price to $0.54 and later to the downtrend line.
To invalidate this positive view, bears will have to pull the price below $0.48. If that happens, the pair could slide to $0.44 and then to $0.42.
Cosmos (ATOM) has not given up ground in the past few days and is trading near its overhead resistance at $13.45. This indicates that traders are not closing their positions as they anticipate the price to move higher. This is the reason for its inclusion in this list.
ATOM/USDT daily chart. Source: TradingView
The ATOM/USDT pair dipped below the 50-day SMA ($11.08) on Aug. 29 but the bulls purchased at lower levels. That started a rebound which reached the overhead resistance at $13.45. The gradually rising moving averages and the RSI in the positive territory indicate the path of least resistance is to the upside.
If buyers propel the price above $13.45, the pair could pick up momentum and rally to $15.30 and then to $20. This positive view could invalidate if the price turns down sharply and plummets below the psychological support at $10.
ATOM/USDT 4-hour chart. Source: TradingView
The 20-EMA is sloping up and the bulls are buying the dips to this support. This suggests a positive sentiment in the short term. The bulls will attempt to push the price to the overhead resistance at $13.45. This is an important level to keep an eye on because a break and close above it could indicate the resumption of the up-move.
Conversely, if the price turns down from the current level or the overhead resistance and breaks below the 20-EMA, it will suggest that bears are active at higher levels. The pair may then remain range-bound between $10 and $13.45 for some time.
Related: Surge or purge? Why the Merge may not save Ethereum price from ‘Septembear’
Filecoin (FIL) had been trading in a tight range between Aug. 27 and Sept. 2, which resolved to the upside on Sept. 3. An expectation that buyers may continue their purchases led to the selection of this coin.
FIL/USDT daily chart. Source: TradingView
The FIL/USDT pair turned up sharply and broke above the 20-day EMA ($6.39) on Sept. 3. This is the first indication that buyers are attempting a comeback. However, the bears are unlikely to surrender easily and they are posing a strong challenge near the 50-day SMA ($6.92).
The bears pulled the price back below the 20-day EMA on Sept. 4. If they sustain the price below this level, the pair could decline to $5.50. Conversely, if the price turns up from the current level and breaks above the 50-day SMA, it will suggest strong buying on dips. The pair could then rally to $9 and thereafter to $9.50.
FIL/USDT 4-hour chart. Source: TradingView
The pair turned down from the overhead resistance zone between $6.80 and $6.60 but a minor positive is that the bulls have not allowed the price to slip below the 20-EMA. If the price rebounds off the current level, the possibility of a break and close above the zone increases.
If that happens, the pair will complete an inverse head and shoulders pattern. The pair could then pick up momentum and rally toward the pattern target of $7.6 and later to $8.30.
This positive view could invalidate in the near term if the price breaks and closes below the 20-EMA. The pair could then drop to the strong support at $5.50.
EOS has made it to the list because even in the mayhem, it has managed to stay above the moving averages. This indicates short-term outperformance and increases the likelihood of a rally if the sentiment in the cryptocurrency sector improves.
EOS/USDT daily chart. Source: TradingView
The EOS/USDT pair completed a rounding bottom pattern on Aug. 21 but the bulls could not sustain the higher levels. The bears pulled the price back below the breakout level on Aug. 28, indicating strong selling on rallies.
A minor positive is that the buyers aggressively purchased the drop to the 50-day SMA ($1.33). The 20-day EMA ($1.48) has flattened out and the RSI is near the midpoint, indicating a balance between buyers and sellers.
This balance could tilt in favor of the bulls if they push and sustain the price above $1.60. The pair could then rally to the overhead resistance near $2. Alternatively, a break and close below the 50-day SMA could open the doors for a possible drop to $1.15.
EOS/USDT 4-hour chart. Source: TradingView
The bears sold the rebound near $1.60 and are attempting to pull the price back below the breakout level of $1.46. If they do that, the pair could decline to the uptrend line. This level has acted as a strong support on three previous occasions, hence the bulls will again try to defend it.
If the price rebounds off the uptrend line and breaks above $1.60, the pair could pick up momentum and rally to $1.80 and later to $2. Conversely, a break and close below the uptrend line will suggest that the short-term up-move could be over. The pair could then decline to $1.24.
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.