Federal Reserve Chair Jerome Powell's recent speech on August 27 indicated that the central bank would begin tapering its $120 billion monthly bond purchases by the end of the year. However, interest rate hikes would only follow stricter tests on employment and inflation metrics.
Market reactions were notable: the U.S. Dollar Index (DXY) dropped, the S&P 500 hit a new high, and Bitcoin (BTC) surged by approximately $1,500 within an hour. Many analysts viewed these moves as a “dovish” response.
Amid Bitcoin’s ongoing consolidation near the $50,000 mark, analysts are divided on its short-term trajectory. While some, like Ryan Clark, compare the current pattern to the consolidation below $24,000 in December 2020 before a breakout, others such as TraderXO suggest a potential correction toward the $39,000–$42,000 zone in September.
Could this period of consolidation attract buying in altcoins? Let’s analyze the top five cryptocurrencies that might outperform in the coming days.
Bitcoin (BTC/USDT)
Bitcoin rebounded from the 20-day Exponential Moving Average (EMA) at $46,823 on August 27. However, buyers failed to push the price above the key resistance zone between $50,000 and $50,500, suggesting that sellers remain active.
A drop below the 20-day EMA could signal profit-taking by short-term traders, potentially pulling the price down to $43,927.70 or even $42,451.67. A rebound from these levels might keep BTC/USDT range-bound between approximately $42,450 and $50,500 for several days.
Conversely, if the price rises from current levels or bounces off the 20-day EMA, buyers may attempt another push above the overhead resistance. A sustained break above $50,500 could signal the start of a rally toward $60,000.
On the 4-hour chart, the moving averages have flattened and the Relative Strength Index (RSI) is near the midpoint, indicating range-bound action in the near term. The price may oscillate between $46,200 and $49,500 for some time.
A break above $49,500 could lead to a retest of the $50,500 resistance. A close above this level may mark the beginning of the next leg up. On the downside, a break below $46,200 could see a decline toward $44,000.
Cardano (ADA/USDT)
Cardano (ADA) is currently consolidating between $2.47 and $2.97. The August 26 dip to the $2.47 breakout level was followed by a strong rebound on August 27, indicating that buyers are defending this support.
Consolidation near an all-time high is generally a bullish sign. With both moving averages sloping upward and the RSI in positive territory, the path of least resistance remains to the upside.
If buyers propel the price above the psychological $3.00 barrier, ADA/USDT could resume its uptrend toward the next target at $3.50.
If the price turns down from the $2.97–$3.00 resistance zone, ADA may continue trading within the range. A break below $2.47 would suggest weakening bullish momentum.
The 4-hour chart shows a negative divergence in the RSI, indicating slowing momentum. A break below the 50-simple moving average could see a drop to $2.47.
A strong bounce from $2.47 might lead to extended consolidation between $2.47 and $2.97. Sellers would need to push the price below the $2.31–$2.47 support zone to gain control. A break above $2.97 could signal a resumption of the uptrend.
Terra (LUNA/USDT)
Terra’s LUNA token remains in a strong uptrend. After several days of consolidation, the price rebounded from the 20-day EMA ($26.42) on August 27, indicating sustained bullish sentiment.
Rising moving averages and an RSI near overbought levels suggest that buyers are in command. The first target on the upside is $43; a break above this could open the doors to $50.
However, the long wick on the August 27 candlestick indicates selling pressure at higher levels. A drop below $32 could see a retest of the 20-day EMA.
This is a critical support for bulls to defend. A strong bounce would keep the uptrend intact, but a break below could signal weakening momentum.
The 4-hour chart shows an expanding wedge pattern, indicating rising volatility. Buyers attempted a breakout above the wedge but failed to sustain it, suggesting aggressive selling at higher levels.
A rebound from the 20-EMA could see another attempt to break out. A sustained move above the wedge resistance could signal a rally toward $46.95.
Alternatively, a break below the moving averages might lead to a decline toward the support line of the wedge. A close below this level could see a drop to the $20.81–$22.40 support zone.
VeChain (VET/USDT)
Since rebounding sharply from the July 21 low near $0.05, VeChain (VET) has formed a pennant pattern. This pattern typically resolves with a breakout in either direction.
The 20-day EMA ($0.11) has flattened, and the RSI is near the midpoint, indicating a balance between supply and demand. A breakout above the pennant’s resistance line could signal a resumption of the uptrend toward $0.16 and possibly $0.19.
Conversely, a break below the pennant’s support line would invalidate the bullish view and could lead to a decline toward the 50-day SMA ($0.09).
The 4-hour chart shows the price being squeezed inside the pennant. The moving averages are flat and the RSI is just below the midpoint, indicating equilibrium between buyers and sellers.
A bounce off the support line faced resistance at the 50-SMA. If the price turns down from current levels, sellers will try to pull VET/USDT below the support line. If successful, a drop to $0.082 is possible.
If buyers push the price above the 50-SMA, VET may challenge the resistance line of the pennant. A breakout could signal the next leg up.
Tezos (XTZ/USDT)
Tezos (XTZ) recently broke out and closed above the $4.47 resistance, completing a rounding bottom pattern. This signals the start of a new uptrend with a target objective of $6.85.
After a breakout, the price often retests the breakout level. If XTZ/USDT pulls back to $4.47 and buyers flip this level into support, it would confirm the new uptrend. The rising 20-day EMA ($4.25) and RSI in overbought territory favor the buyers.
If the price turns down and breaks below the 20-day EMA, it would suggest that supply exceeds demand. This could trap aggressive bulls and lead to a decline to the 50-day SMA ($3.31).
The 4-hour chart shows that the bullish momentum picked up after the breakout above $4.47. The moving averages are sloping up and the RSI is in overbought territory, indicating that buyers have the upper hand.
XTZ/USDT could rise to the next resistance zone between $6.31 and $6.50, where sellers may mount a strong defense. The first sign of weakness would be a break below the 20-EMA, which could open the doors for a retest of $4.47.
Frequently Asked Questions
What is a rounding bottom pattern?
A rounding bottom is a chart pattern that signals a reversal from a downtrend to an uptrend. It resembles a bowl and indicates a gradual shift from selling to buying pressure. The breakout above the resistance completes the pattern, often setting a price target measured by the depth of the bowl.
How does Fed policy affect cryptocurrency prices?
Changes in U.S. monetary policy, such as tapering bond purchases or adjusting interest rates, can influence investor sentiment and capital flow. Dovish policies often weaken the dollar and may drive investment into risk assets like cryptocurrencies, while hawkish moves can have the opposite effect.
What does RSI divergence indicate?
Relative Strength Index (RSI) divergence occurs when the price moves in the opposite direction of the RSI. A negative divergence—price making higher highs while RSI makes lower highs—can signal weakening momentum and a potential trend reversal or pullback.
Why is the 20-day EMA important?
The 20-day exponential moving average is widely watched by traders as a short-term trend indicator. Prices staying above it often suggest bullish sentiment, while a break below may indicate weakening momentum or a trend change.
How can I identify a valid breakout?
A valid breakout typically involves a decisive price move above a key resistance level, accompanied by an increase in volume. It should be sustained for several periods to confirm that it is not a false breakout. Traders often wait for a retest of the breakout level as support before entering.
Where can I track these cryptocurrencies in real time?
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