The crypto markets are in a strong bull trend but the rally could hit rough weather as the uptrend begins to look overextended.
The total crypto market capitalization has topped $300 billion for the first time since early-August of 2019. This shows that the bulls are back in action. Interestingly, it is not only the crypto markets that have been moving up, even the US stock markets have been making new lifetime highs in 2020.
Chicago Mercantile Exchange chief economist Bluford Putnam echoed the popular belief that Bitcoin is a non-correlated asset and can be a valuable addition to traditional portfolios. Due to Bitcoin’s high volatility, Putnam suggested a 2% allocation to Bitcoin in the typical hedge-type portfolio, which normally holds 60% stocks and 40% fixed income assets, such as bonds.
Daily cryptocurrency market performance. Source: Coin360
Bitcoin remains the largest cryptocurrency in focus but throughout this recent rally many altcoins that have led from the front. This shows that the market participants are diversifying away from Bitcoin and are buying altcoins that have strong potential.
Will altcoins continue to lead this rally or will Bitcoin pick up momentum? Let’s analyze the charts to find out.
The bulls are attempting to push Bitcoin (BTC) above the overhead resistance at $10,360.89. If successful, a rally to the long-term downtrend line at $11,500 is possible. The upsloping moving averages and the RSI in positive territory show that bulls have the upper hand.
BTC USD daily chart. Source: Tradingview
In Aug. and Sep. of last year, the bulls had failed to push the price above $11,000. Therefore, we expect several hurdles between the current levels and the downtrend line.
However, if the bulls do not give up much ground during corrections, it would increase the possibility of a break above the downtrend line. Above this level, there is a minor resistance at $13,973.50. If this level is scaled, a retest of the lifetime highs is likely.
The first sign of weakness would be a break below the 20-day EMA and a possible change in trend would be signaled if the bears sink the BTC/USD pair below $9,097.15. Therefore, the traders can retain the stop loss on the remaining long positions at $8,900. The stops can be trailed higher after the price sustains above $10,360.89.
Ether (ETH) has broken above the overhead resistance at $235.70 without much difficulty, which is a huge positive. This shows that the sentiment is strongly in favor of the bulls. The next level to watch out for is $289.221 and above it $318.238.
ETH USD daily chart. Source: Tradingview
Both moving averages are sloping up and the RSI is in the overbought zone, which shows that bulls are in command. During strong up moves, the RSI can remain in overbought territory for an extended period of time.
Therefore, we do not suggest closing a trade just because the RSI is in the overbought zone. Nonetheless, the deeper the RSI rises into the overbought territory, the more vulnerable the asset is to a correction. Therefore, it is prudent to protect the paper profits with a close stop loss.
Our bullish view will be invalidated if the ETH/USD pair turns down from the current levels and sustains below the breakout level of $235.70. Therefore, the traders can trail the stop-loss on the remaining long positions to $210.
After a few days of consolidation, the bulls have pushed the price above the long-term downtrend line. This is a huge positive as it increases the possibility of a new uptrend in XRP. The next level to watch out for is $0.31503.
XRP USD daily chart. Source: Tradingview
We spot a rounding bottom pattern, which will complete on a breakout and close (UTC time) above $0.31503. This pattern has a target objective of $0.45538. Though there is a minor resistance at $0.34229, we expect it to be crossed.
Our bullish view will be invalidated if the price turns down from the overhead resistance at $0.31503 and plunge below the most recent low of $0.26362. Therefore, the stops on the long positions can be trailed to $0.26.
Bitcoin Cash (BCH) has resumed its up move. It can now move up to the psychological resistance at $500 and above it to the resistance line of the ascending channel at about $522.
BCH USD daily chart. Source: Tradingview
We anticipate the bears to mount a strong defense in the $500 to $522 range. The deeply overbought reading on the RSI also signals the possibility of a minor correction or a period of consolidation.
However, as long as the price remains inside the ascending channel, its uptrend remains intact. The first sign of weakness will be a break below the support line of the ascending channel.
Bitcoin SV (BSV) has resumed its up move towards the lifetime highs at $458.74. With both moving averages sloping up and RSI close to the overbought zone, the advantage is with the bulls.
BSV USD daily chart. Source: Tradingview
However, the bears will attempt to stall the up move in the $373.653-$411.074 zone, which corresponds to 61.80% and 78.60% Fibonacci retracement level of the recent pullback from the peak of $458.74 to the trough of $236.
Any pullback in the BSV/USD pair is likely to find support at $337.80. A breakdown of this support will indicate a lack of demand at higher levels.
Litecoin (LTC) is close to the overhead resistance at $80.2731. If the bulls can push the price above this resistance, it will be a huge positive. The next level to watch on the upside is $96.439, which is the target objective of the breakout from the rounding bottom pattern.
LTC USD daily chart. Source: Tradingview
Both moving averages are sloping up and the RSI is in the overbought territory, which suggests that bulls have the upper hand.
The first sign of weakness will be a break below the 20-day EMA. Below this level, the next critical support is $66.1486. Our bullish view will be invalidated if the bears sink the LTC/USDT pair below this support.
EOS has resumed its up move towards the first target objective of $6. This is a huge positive. We anticipate the bears will defend the $6 levels aggressively. The RSI has risen deep into the overbought zone, which also suggests a possible correction or consolidation in the next few days.
EOS USD daily chart. Source: Tradingview
Any pullback from the overhead resistance level is likely to find support at $4.8719. If the price rebounds off $4.8719, the bulls will attempt to resume the up move. Above $6, the next level to watch out for is $7.60.
However, if the bears sink the price below $4.8719, the correction can extend to the next support at $4.24. A break below this level will turn the trend in favor of the bears.
Binance Coin (BNB) has sustained above $23.5213 for the past three days, which confirms the breakout. It can now move up to the next target objective of $29. Though the trend remains up, the deeply overbought reading on the RSI suggests a possible correction.
BNB USD daily chart. Source: Tradingview
Any dip is likely to find support in the $23.5213 to $21.80 zone. If the price bounces off this zone, the bulls will again attempt to carry the price to $29 and above it to $32.
Our bullish view will be invalidated if the bears sink the price below the support zone. Therefore, traders can keep the stop loss on the entire long position at $21.
The momentum in Tezos (XTZ) has carried the price above $3.35, which was the target objective of the breakout from the ascending triangle. Though the trend remains up, the rally following the breakout from the triangle has been vertical. Such rallies are usually not sustainable.
XTZ USD daily chart. Source: Tradingview
The sharp pace of the rally has pushed the RSI deep into the overbought territory, which increases the possibility of a pullback. The pullback can drag the XTZ/USD pair to $2.67141380, which is the 38.2% Fibonacci retracement level of the recent leg of the rally from $1.4576 to $3.4217.
We believe that the risk to reward ratio at the current levels is skewed to the downside. Hence, traders should protect their positions with a suitable stop loss and should not get carried away by greed.
The bulls have pushed the price above the overhead resistance at $0.065229. If the bulls can sustain the breakout, Cardano (ADA) can move up to its first target objective of $0.08 and above it to $0.10.
ADA USD daily chart. Source: Tradingview
However, this leg of the up move has pushed the RSI deep into the overbought territory. This suggests that a pullback might be around the corner.
The first support on the downside is $0.065229. If the ADA/USD pair bounces off this support, it is likely to climb up to $0.08.
On the other hand, if the bears sink the price below $0.065229, the decline can extend to $0.0560221. A break below this level will turn the trend in favor of the bears. The traders can trail the stop loss on the remaining long positions to $0.06.
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.
Market data is provided by HitBTC exchange.