Crypto analyst Rakesh Upadhyay says that strong US inflation data has pulled Bitcoin and certain altcoins like BNB below close support levels, signaling several days of corrective action. What are the key support levels in Bitcoin and altcoins? The analyst lays out the top 10 cryptocurrencies to find out.
An overview of the cryptocurrency market
Bitcoin is struggling to stay above $23,000 as the weekend approaches. cryptocoin.comAs you can see in January, sales pressure increased as personal consumption expenditures excluding food and energy increased by 0.6% and 4.7% annually, above the market expectations of 0.5% and 4.4%, respectively. This could trigger fears that the Fed may need to continue with rate hikes to contain inflation. Expectations of rate hikes could further strengthen the US dollar index, which is already near a seven-week high, which could put pressure on crypto markets in the near term.
A drop in the cryptocurrency markets could start the discussion that the rally in January could be a bull trap. However, the price action in Bitcoin and several altcoins suggests that a bottom may have begun. The next drop could create a higher low before attempting to break higher. Now it’s time for analysis…
BTC, ETH, BNB, XRP and ADA analysis
Bitcoin (BTC): The bullish momentum has weakened
Buyers successfully held the 20-day exponential moving average ($23,440) for the past two days, but the failure to sustain the recovery attracted strong selling on Feb. 24.
A negative divergence in the relative strength index (RSI) indicates that the bullish momentum is weakening. BTC has reached the close support at $22,800. A break below this level could retest the critical support zone between the 50-day simple moving average ($22,052) and $21,480. Alternatively, if the price fails to stay below the 20-day EMA, this will indicate that the bulls are buying the bottoms as they expect a move higher. A break and close above $25,250 could start the next leg of the uptrend.
Ethereum (ETH): Solid buying at lower levels
ETH broke below the 20-day EMA ($1,624) on Feb. 22. However, the long tail on the candlestick shows solid buying at the lower levels. The bulls tried to extend the advantage and push the price above $1,680 on Feb. 23, but the bears held their ground.
Selling intensified on February 24 and the price dropped to the 50-day SMA ($1,565). This is an important support for the bulls to protect because if it breaks, ETH could drop to $1,461. Conversely, if the price bounces back strongly from the 50-day SMA, it will indicate that the bulls are buying the lows. Buyers will then try to push the price above the $1,680-$1,743 resistance area and continue the upward move.
Binance Coin (BNB): Bears beat bulls
BNB’s narrow gap trading between the overhead resistance of $318 and the 50-day SMA ($304) was resolved to the downside on Feb. 24. This shows that the bears are beating the bulls.
Although the 20-day EMA ($310) is flat, the RSI has dropped below 46, indicating that the momentum is shifting in favor of the bears. BNB could decline to the $280 level. This is an important level to watch out for. Because a break below this would complete a bearish head and shoulders (H&S) pattern for BNB. If buyers want to avoid the sharp decline, they will have to quickly push the BNB price above $318. This could open the way to the neckline of the bullish reversal H&S pattern.
Ripple (XRP): Bulls failed to force a breakout
XRP has traded near the resistance line of the descending channel pattern for the past few days, but the bulls have been unable to force a breakout.
This may have pulled selling from short-term bears that drove the price below the moving averages. XRP can now decline to the solid support at $0.36. If this level fails to hold, the decline may extend to $0.33. Contrary to this assumption, if the price rebounds from $0.36, the bulls will make another attempt to break through the hurdle at the resistance line. If they manage to do so, the pair could rally to the overhead resistance of $0.43.
Cardano (ADA): Bears sell on small rallies
The bulls have managed to hold ADA above the $0.38 close support for the past two days. However, they failed to sustain the recovery above the 20-day EMA ($0.39). This shows that the bears are selling on small rallies.
The price dropped to the 50-day SMA ($0.37) on Feb. 24. If this support is broken, ADA could slide into the strong support zone between $0.34 and $0.32. Buyers are expected to defend this area with all their might. Because if they don’t, selling could intensify and a drop towards $0.27 cannot be ruled out. Conversely, if the price rises from the current level, the bulls will try to push the price back above the 20-day EMA and retest the neckline of the inverse H&S pattern.
DOGE, MATIC, SOL, DOT and SHIB analysis
Dogecoin (DOGE): Small advantage for bears
DOGE fell below the level on February 23 after staying above the 50-day SMA ($0.08) for a few days. This marks a minor advantage for the bears.
DOGE could decline to strong support near $0.08. Buyers are likely to defend this level aggressively. Because a breakout and a close below it could complete a bearish H&S pattern in the near term. This could start a downward move towards the critical support of $0.07 and then the pattern target of $0.06. If the bulls want to gain the upper hand, they will have to push the price above $0.09. This could result in a retest of the $0.10 to $0.11 resistance zone.
Polygon (MATIC): Bears sell recovery
As seen from the long tail on the daily candlestick, the MATIC rebounded from the 20-day EMA ($1.32) on Feb. 22. However, the bears sold out and the price dropped below the 20-day EMA on Feb. 24.
During uptrends, if the 20-day EMA is broken, short-term bulls tend to take profits. This starts a deeper correction that sometimes extends as far as the 50-day SMA ($1.13). Here too, if the bears hold the price below $1.30, the MATIC could drop to the 50-day SMA. This level is likely to attract buyers again. If the bulls want to prevent a deeper correction, they will have to quickly push the price above the downtrend line. MATIC could then rally to $1.50 and then $1.57.
Solana (SOL): Bulls not buying aggressively
The SOL has failed to recover from the 20-day EMA ($23.32) in the past two days, indicating that the bulls are not buying aggressively. This may have discouraged the bears, which pushed the price towards the 50-day SMA ($22.19).
The flattening 20-day EMA and the RSI near the midpoint indicate that the buying pressure is easing. If the 50-day SMA breaks, the SOL could drop to the next support at $18.73. This is an important level to follow. Because a break below this could start a deeper correction towards $15. This negative view will be invalidated in the near term if the price rises from the moving averages and rises above $28. SOL can then quickly go up to $39.
Polkadot (DOT): Bulls failed to sustain recovery
The DOT bounced off the 20-day EMA ($6.79) on February 22 and broke above the $7.25 resistance on February 23, but the bulls failed to sustain the recovery. This indicates that the bears are trying to make a comeback.
Selling continued on February 24 and the bears pushed the price below the 20-day EMA. Only if the close support is broken at the 50-day SMA ($6.25), selling could accelerate and the DOT could drop to $5.50. If the bulls want to invalidate the bearish view, they will need to successfully defend the moving averages and push the price above $7.39. This will indicate strong demand at lower levels. The DOT could then rally to $8 and then to $9.50.
Shiba Inu (SHIB): Bears sell in rallies
The long wick on SHIB’s February 23 candlestick indicates that the bears are selling on rallies near the overhead resistance of $0.000014.
The price action of the last few days has formed a symmetrical triangle pattern that shows the indecision between the bulls and bears. If the price breaks and stays below the triangle, the advantage could turn in favor of the bears. This could start to slide to the 50-day SMA ($0.000012) and eventually to $0.000011. Contrary to this assumption, if the price rises and rises above $0.000014, it will indicate that the bulls are back in the driver’s seat. SHIB could then climb to $0.000016.
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