While U.S. equities experienced a strong rebound this week, Bitcoin failed to follow suit. This divergence suggests that crypto investors are adopting a cautious stance, possibly due to ongoing concerns surrounding Silvergate Bank. Such apprehension may have contributed to the total crypto market capitalization dipping to around $1 trillion.
According to a March 5 report from behavioral analytics platform Santiment, their social trends chart comparing bullish versus bearish vocabulary showed a "significant spike in bearish sentiment." However, the report added that "this overwhelming pessimism could potentially trigger a rebound, proving the critics wrong."
Another short-term positive factor for the crypto market is the weakening U.S. Dollar Index (DXY), which declined 0.70% over the past seven days. This often correlates with potential strength in cryptocurrencies, suggesting the market might attempt a recovery in the coming days. As long as Bitcoin holds above the $20,000 level, select altcoins could be poised to outperform.
Let's analyze the charts of Bitcoin and four altcoins that have recently shown promising signs.
Bitcoin (BTC) Price Analysis
Bitcoin broke below the $22,800 support level on March 3. Buyers attempted to push the price back above this breakdown level on March 5, but the long wick on the candlestick indicates that sellers are aggressively defending the $22,800 mark.
The 20-day Exponential Moving Average (EMA) at $23,159 has begun to slope downward, and the Relative Strength Index (RSI) is below 44, suggesting sellers are attempting to strengthen their position. Bears will likely try to sink the price below the $21,480 support level. A successful break could see the BTC/USDT pair retest the crucial $20,000 support zone.
To prevent further downside, bulls need to quickly propel the price above the 20-day EMA. Such a move would signal aggressive buying at lower levels. The pair could then rise toward $24,000 and potentially $25,250. A breakout above this resistance would indicate a potential trend change.
On the 4-hour chart, the moving averages are sloping down, and the RSI is near 39, indicating bears have the upper hand. If the price turns down from the 20-EMA and breaks below $21,971, the pair could retest the $21,480 support.
Conversely, if bulls push the price above the 20-EMA, it would signal that sellers are losing their grip. The pair could then climb toward the 50-day Simple Moving Average (SMA). This is a key level for bears to defend, as a break above it could open the doors for a rally toward $24,000.
EOS Technical Outlook
EOS broke above the significant resistance at $1.26 on March 3, but bulls could not sustain the higher levels. A positive sign, however, is that the price has not collapsed back below the 20-day EMA ($1.17).
The gradually rising moving averages and the RSI in positive territory suggest that bulls have the advantage. The EOS/USDT pair has formed a rounding bottom pattern, which will complete on a break above the $1.26 to $1.34 resistance zone. This reversal setup has a target objective of $1.74.
The important support to watch on the downside is the 50-day SMA ($1.10). Buyers have not allowed the price to close below this support since January 8; a break below it could accelerate selling. The next support levels are at $1.00 and $0.93.
On the 4-hour chart, bears pulled the price below the 20-EMA, but a minor positive is that bulls did not allow the pair to drop to the 50-SMA. This suggests continued buying interest at lower levels. If the price rises above the 20-EMA, bulls will make another attempt to clear the $1.26 hurdle. If successful, the pair could rally to $1.34.
This positive view will be invalidated in the short term if the price turns down and breaks below the 50-SMA. Such a move could extend the decline to $1.11.
STX Price Potential
Stacks (STX) witnessed a massive rally from $0.30 on February 17 to $1.04 on March 1, a gain of 246% in a short time. Vertical rallies are often followed by sharp pullbacks, which is what occurred.
The STX/USDT pair dropped to the 20-day EMA ($0.69), where it attracted buying interest. The 50% Fibonacci retracement level of $0.67 is also nearby, so bulls will likely defend this zone vigorously. On the upside, sellers will attempt to stall the relief rally in the $0.83 to $0.91 zone.
If the price turns down from this overhead region, sellers will try to deepen the correction. A break below $0.67 could see the pair fall to the 61.8% retracement level at $0.58.
Contrary to this assumption, if buyers thrust the price above $0.91, the pair could rise to $1.04. A break above this level would signal the resumption of the uptrend. The pair may then rally toward $1.43.
The 4-hour chart shows the 20-EMA is sloping down and the RSI is in negative territory, indicating a slight advantage to sellers. Bears will likely defend the moving averages during any bounce. They will try to sustain their hold and sink the price to $0.65 and then to $0.56. Bulls are expected to defend this support zone aggressively.
The first sign of strength will be a break and close above the 50-SMA. The pair could then rise to $0.94 and later to $1.04.
IMX/USDT Chart Analysis
ImmutableX (IMX) rebounded off the 50-day SMA ($0.88) on March 3 and closed above the 20-day EMA ($1.00), indicating solid demand at lower levels.
The IMX/USDT pair could rise to $1.12, where bears will again try to halt the recovery. If buyers bulldoze their way through, the pair could accelerate toward the overhead resistance at $1.30. This is a key level to watch because a break and close above it could signal the start of a new uptrend. The pair may then rally to $1.85.
Conversely, if the price turns down from the current level or $1.12, it will suggest that bears have not given up. Sellers will then try to pull the pair below the 50-day SMA and gain the upper hand. If successful, the pair could slide to $0.63.
The 4-hour chart shows the price oscillating between $0.92 and $1.12. Generally, inside a range, traders buy near support and sell near resistance. Price action within the range can be random and volatile.
If the price rises above the resistance, it will indicate that bulls have overpowered the bears. The pair could then start a rally to $1.30. Alternatively, if bears sink the price below $0.92, the pair could turn bearish in the near term. The next support on the downside is at $0.83, followed by $0.73.
Maker (MKR) Market Outlook
After a short-term pullback, Maker is attempting to resume its uptrend. This suggests that sentiment remains positive, and traders are viewing the dips as buying opportunities.
The rising moving averages and the RSI in positive territory indicate that the path of least resistance is to the upside. If buyers sustain the price above $963, the MKR/USDT pair could start its journey toward the resistance zone between $1,150 and $1,170.
If bears want to stop the bullish trend, they will have to pull the price below the 20-day EMA ($807). If they manage to do that, stops of several short-term traders may be hit. The pair could then drop to the 50-day SMA ($731).
The pair has been trading between $832 and $963 for some time, but bulls are attempting to push the price above the range. The 20-EMA has turned up, and the RSI is in positive territory, indicating that bulls are in command.
If the price sustains above $963, the pair could attempt a rally to the pattern target of $1,094. On the other hand, if the price turns down sharply from $963, it will suggest that the breakout may have been a bull trap. That could extend the consolidation for some more time.
Frequently Asked Questions
What does bearish sentiment in crypto social trends indicate?
Extreme bearish sentiment on social media, as measured by analytics platforms, can sometimes act as a contrarian indicator. When pessimism becomes overwhelming, it may signal that a large portion of sellers have already acted, potentially setting the stage for a market rebound.
How does the U.S. Dollar Index (DXY) affect cryptocurrency prices?
The DXY measures the U.S. dollar's strength against a basket of foreign currencies. Generally, a weaker DXY can be supportive of risk-on assets like cryptocurrencies, as it makes dollar-denominated assets cheaper for investors using other currencies. A falling DXY often coincides with potential strength in crypto markets.
What is a rounding bottom pattern in technical analysis?
A rounding bottom is a long-term reversal pattern that signals a shift from a downtrend to a new uptrend. It resembles a "U" shape on the chart. The pattern is confirmed when the price breaks out above its resistance level with increasing volume, and its projected target is estimated by the depth of the pattern's bowl.
Why is the 20-day Exponential Moving Average (EMA) important?
The 20-day EMA is a widely tracked short-term trend indicator. Traders often view the 20-day EMA as dynamic support in an uptrend and dynamic resistance in a downtrend. A sustained break above or below it can signal a potential change in short-term momentum.
What does the RSI level indicate for an asset?
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. An RSI below 30 typically suggests an asset is oversold (potentially undervalued), while an RSI above 70 suggests it is overbought (potentially overvalued). It helps traders identify potential reversal points.
How can traders identify a potential bull trap?
A bull trap occurs when a price appears to break out above a resistance level, luring in buyers, but then quickly reverses direction and moves lower. It can often be identified by low trading volume on the breakout, failure to sustain the higher levels, and a sharp rejection candle with a long wick. For advanced strategies on navigating such market conditions, explore more analysis techniques here.