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Bitcoin is being sold aggressively, but if main support levels remain, ETH, ADA, SOL, and MATIC could lead the market higher.
During strong uptrends, any reversal is actively bought because traders expect higher levels in the future. As a result, corrections during a bull period are superficial, and the pattern returns easily.
When the movement shifts from up to down, traders hold off on selling on spikes because they think lower prices are imminent. Help thresholds are quickly broken in a bearish environment, and the commodity proceeds to fall.
In general, a downtrend that follows a raging bull market does not stop until a capitulation period in which most bulls have given up hope of a sharp rebound. After that, the commodity class reaches the bottom.
Despite the uncertainty, markets should focus on the basics and the long-term narrative of cryptocurrencies. Rather than panicking, they should make an educated decision.
Let’s take a look at the top five cryptocurrencies that could attempt a relief rally in the coming days.
On May 19, Bitcoin (BTC) fell and closed below the 200-day simple moving average ($40,235). Institutional investors actively monitor this metric and normally stop investing if the price remains below it for an extended period of time.
Buyers pushed the price back above the 200-day SMA on May 20 but they could not sustain the price above it. This shows that bears are selling on rallies. The BTC/USDT pair could now drop to $28,850. This is an important support to watch out for because if it cracks, the selling could intensify further with the next stop at $20,000.
The downsloping 50-day SMA ($53,500) and the relative strength index (RSI) in the oversold zone suggest advantage to the bears.
However, if the price rebounds off the $28,850 support, the bulls will make one more attempt to push the price above the 200-day SMA. If they succeed, the pair could rise to the neckline of the head and shoulders pattern.
The bears are selling relief rallies to the downtrend line on the 4-hour map. This indicates that momentum has shifted negative, and traders see pullbacks to overhead support levels as an incentive to short.
The 50-SMA is sloping downward, and the RSI has been trading in the negative sector, signalling a bearish advantage. A breakout and close over the downtrend line would be the first indication of strength. A change like this could pave the way for a rally to $42,401, and then $46,000.
Ether (ETH) broke below the 50-day SMA ($2,776) on May 19. The bulls tried to push and sustain the price above the 50-day SMA on May 20 and 21 but failed. This shows that traders sold on rallies.
If the price remains below $1,801.60, the ETH/USDT pair could fall to the 200-day simple moving average ($1,578). This degree is likely to have solid support. If the price bounces off it, the pair can climb to the 50-day SMA, where the bears are likely to mount strong resistance once more.
If the price falls below the 50-day simple moving average, the pair can stay range-bound for a few days. In contrast to this expectation, if the bears drive the market below the 200-day SMA, fear will set in, and the pair will fall to $1,289.09.
The 50-day SMA is flattening out and the RSI is nearing oversold levels, showing a pessimistic short-term pattern but a neutral medium-term trend.
On the 4-hour map, the pair is trading within a descending channel, and the moving averages have completed a bearish convergence, indicating a pessimistic short-term pattern. If the bears continue to push the price below the channel’s support line, selling pressure may intensify, and the pair will fall to $1,289.09.
In the other hand, if the price bounces off the channel’s support line, the bulls will make one more effort to drive the pair beyond the channel. If they excel, the downtrend may be over, and the pair may recover to $3,000.
Cardano (ADA) rebounded off the $0.95 level on May 19 and the bulls extended the relief rally on May 20 but higher levels attracted profit-booking and the price dipped back below the $1.48 support on May 22.
On the downside, the $1 to $0.95 range is likely to serve as solid support. If the price bounces off this help, the ADA/USDT pair may attempt to jump back up to $1.48. The flattening 50-day SMA ($1.44) signals range-bound trading.
In contrast to this expectation, if the bears dive and keep the price below the support level, the pair might fall to the 200-day simple moving average ($0.77). A quick bounce from this level indicates that the markets have refused the lower levels. The bulls will then continue to drive the market beyond $1 once more.
If this occurs, the pair will reach a consolidation phase. If the pair falls below the 200-day SMA, this view would be made invalid.
The 50-SMA on the 4-hour chart has begun to decline, and the RSI is in the negative region, signalling a bearish advantage. The bulls, on the other hand, are likely to jump in and buy dips around the crucial $1 support level.
If this occurs, the pullback will break the downtrend line, which will most likely serve as stiff resistance. The pair could reach $1.48 if the bulls push the price above the downtrend line. If the pair splits below the $1 to $0.95 support, this bullish view will be rendered null and void.
Solana (SOL) broke below the 50-day SMA ($37) on May 19 but rebounded sharply on May 20. However, the long wick on the May 20 candlestick suggests traders booked profits at higher levels and bears initiated short positions.
On May 22, the selling accelerated, and the SOL/USDT pair fell below the 50-day simple moving average. The selling has persisted today, with the price falling to a high support level of $21.10.
If the price bounces off this help, the pair could try to reach the 38.2% Fibonacci retracement level at $35.48. A breakout and close over the 50-day simple moving average would indicate that the short-term pattern is tilting in favour of the bulls.
Alternatively, if the price falls from $35.48, the bulls will continue to push it below $21.10. If they are good, the pair could fall to the 200-day simple moving average ($14.29).
The moving averages are on the brink of a bearish convergence on the 4-hour map, signalling a bearish advantage. However, the RSI has fallen far into negative territory, indicating that the sale could be overdone in the short term.
If the market recovers from $21.10, the bulls will attempt to drive it over the downtrend line. If they succeed, the pair could try to rebound to $35.48 and then to the 50-SMA.
If the price falls below the downtrend line, the probability of a split below $21.10 increases.
Polygon (MATIC) has witnessed a sharp decline since hitting the all-time high at $2.70 on May 18. The altcoin has given up all the gains that it had accrued since May 11 and dropped to the 50-day SMA ($0.78).
The bulls are likely to protect the 50-day SMA, and if the market recovers from the support stage, the MATIC/USDT pair could rally to the 38.2 percent Fibonacci retracement level at $1.53. A break through this resistance would be the first sign that selling pressure is easing.
If the price falls below $1.53, the pair will fall to the 50-day simple moving average. The flattish 50-day SMA and RSI below 45 indicate a potential short-term consolidation.
This viewpoint would be made null and void if the price falls below the 50-day SMA. If this occurs, the pair will fall to $0.68 and then to $0.54.
The bulls are attempting to halt the waterfall drop at $0.80 on the 4-hour map. Any turnaround, though, is likely to be met with strong resistance at the downtrend line. If the price falls through this resistance, the downtrend may continue to $0.68.
The 50-SMA has begun to decline, and the RSI is in oversold territory, signalling a bearish advantage. This pessimistic outlook will be reversed if the market recovers from its current lows and maintains above the downtrend line. A relief rally to $1.53 could benefit from such a move.