Bitcoin's narrow trading range suggests a decisive breakout is imminent, and several major altcoins like Cardano (ADA), Stellar (XLM), Aave (AAVE), and Conflux (CFX) may be primed to follow. The extended weekend did not produce significant price action for Bitcoin, which continues to consolidate within a tightening range. This indecision is reflected in the potential formation of a third consecutive doji candlestick on the weekly chart.
This period of consolidation isn't unique to Bitcoin. Jurrien Timmer, Global Macro Director at Fidelity Investments, noted on Twitter that the S&P 500 has also been range-bound for the past nine months, suggesting a significant breakout is inevitable.
Bitcoin's struggle to break the $30,000 level has triggered profit-taking in several altcoins, though many have seen only shallow pullbacks. This indicates that traders are holding their positions in anticipation of a move higher.
Below, we analyze the charts of these selected altcoins that could potentially begin a strong uptrend if Bitcoin breaks out to the upside. What are the key resistance levels that need to be conquered for these five cryptocurrencies to turn bullish?
Bitcoin (BTC) Price Analysis
Bitcoin has been trading in a tight range over the past few days, indicating indecision between buyers and sellers. Typically, such narrow consolidations are followed by a period of expanded volatility.
BTC/USDT Daily Chart Analysis
The 20-day Exponential Moving Average (EMA) at $27,500 is flattening, and the Relative Strength Index (RSI) is gradually declining towards the midpoint. This suggests a balance between supply and demand.
A break below the 20-day EMA could trigger several short-term stop-losses, potentially pushing the BTC/USDT pair down to the breakout level of $25,250.
Conversely, a strong rebound from the 20-day EMA would indicate continued bullish sentiment and that traders are buying the dips. A move above $29,200 could strengthen the prospects of a rally towards $30,000 and subsequently to $32,500.
BTC/USDT 4-Hour Chart Analysis
On the 4-hour chart, the 20-EMA is flattening, and the RSI is just below the midpoint, offering no clear advantage to either bulls or bears. This uncertainty is unlikely to last long, and a directional move could begin soon. Predicting the direction of the breakout, however, is difficult.
Therefore, it's prudent to wait for the breakout to occur before taking a strong directional bet. The key levels to watch are $29,200 on the upside and $26,500 on the downside. A break above or below these levels could determine the next short-term trend.
Cardano (ADA) Price Analysis
Bulls have successfully defended the 20-day EMA (currently at $0.37), indicating solid demand at lower levels.
ADA/USDT Daily Chart Analysis
The upward-sloping 20-day EMA and the RSI in positive territory suggest the path of least resistance is to the upside. The ADA/USDT pair could first rise to the neckline of a head-and-shoulders (H&S) pattern. A break and close above this resistance would signal a potential trend change, with the pair then potentially rallying towards the pattern target near $0.60.
To prevent this upward move, bears would need to quickly pull the price back below the 20-day EMA. Such a move could see the pair drop to the 200-day Simple Moving Average (SMA) at $0.35 and then towards $0.30.
ADA/USDT 4-Hour Chart Analysis
The 4-hour chart shows that bulls have pushed the price above the 20-EMA and are now attempting to overcome the resistance of a descending trendline. A successful break above this trendline would indicate that the correction may be over. The pair could then climb towards the neckline, where bears are expected to mount a strong defense.
If the price is rejected at the descending trendline, it would signal that sellers are active at higher levels. Selling pressure could then accelerate below $0.37, potentially leading to a drop towards the 200-SMA.
Stellar (XLM) Price Analysis
Stellar has pulled back from the overhead resistance at $0.12 and is now approaching its 20-day EMA ($0.10), a level where buyers may step in again.
XLM/USDT Daily Chart Analysis
If the price rebounds from the 20-day EMA, buyers will make another attempt to clear the overhead hurdle. A successful break above $0.12 would complete a bullish rounding bottom pattern, potentially signaling the start of a new uptrend. This could push the XLM/USDT pair first towards $0.15 and then up to the pattern target near $0.17.
Contrary to this assumption, a break below the 20-day EMA would indicate that bulls are losing their grip. The pair could then fall to the 200-day SMA ($0.09). This is a critical level for the bulls to defend; a break below it could see the pair plummet to $0.07.
XLM/USDT 4-Hour Chart Analysis
The 4-hour chart shows the pair is correcting within a descending wedge pattern. The price has bounced from the support line, and buyers will now try to push the pair above the wedge. If they succeed, the pair could rally to $0.11 and then to $0.12.
If the price turns down and breaks below the wedge's support line, it would indicate increasing selling pressure. There is minor support at $0.10, but if that level breaks, the decline could extend to the 200-SMA.
Aave (AAVE) Price Analysis
AAVE has faced rejection from the overhead resistance at $82, indicating that bears are actively defending this level. They have pulled the price below the immediate support of the 20-day EMA ($75).
AAVE/USDT Daily Chart Analysis
The AAVE/USDT pair could now drop to the 200-day SMA ($73), which is near a crucial ascending trendline. Buyers are likely to defend this level vigorously. A strong bounce from the trendline and a move above the 20-day EMA could see the pair retest $82.
A break above this resistance would complete an ascending triangle pattern, which has a target objective of $100. This bullish view will be invalidated if the price continues lower and breaks below the ascending trendline. Such a move could see the pair slide to $68 and then to $64.
AAVE/USDT 4-Hour Chart Analysis
Bears have pulled the price to the 200-SMA on the 4-hour chart. The 20-EMA is starting to slope down, and the RSI is in negative territory, indicating that sellers have the upper hand.
If the 200-SMA support gives way, the pair could drop further to the ascending trendline. This is an important level for bulls to defend, as a break below it would provide a significant advantage to the bears.
On the upside, a break above the 20-EMA will be the first sign of a comeback by the bulls. The pair could then rise to the overhead resistance at $82.
Conflux (CFX) Price Analysis
Conflux (CFX) has been in a corrective phase over the past few days, but a minor positive is that bulls are attempting to defend the 20-day EMA ($0.36).
CFX/USDT Daily Chart Analysis
If the price rebounds from the current level, the CFX/USDT pair could rise to the descending trendline. This is a significant level for bears to defend because a break above it could open the doors for a potential rally to $0.44 and then $0.49.
Conversely, if the price plummets and sustains below the 20-day EMA, it will suggest that bulls may be rushing to the exit. This could attract further selling and pull the price down to the next support at $0.30, where buyers are expected to step in.
CFX/USDT 4-Hour Chart Analysis
The 4-hour chart shows that bears are trying to sustain the price below the 20-EMA. This could pull the pair down to the 200-SMA, which is likely to act as a strong support.
If the price rebounds from this level, buyers will again try to thrust the price toward the descending trendline. This is the key level to watch out for, as a break above it will signal that bulls are back in the game.
On the downside, a break and close below the $0.30 support could trigger further selling and sink the price to $0.25.
Frequently Asked Questions
What does a doji candlestick pattern indicate?
A doji candlestick represents indecision in the market, where the opening and closing prices are very close to each other. It often suggests that the prior trend may be losing momentum and can sometimes signal a potential reversal, especially when it appears after a strong rally or decline.
How can I identify a potential trend change in cryptocurrency?
Key indicators of a potential trend change include a break of significant support or resistance levels, a shift in momentum shown by the RSI moving out of overbought or oversold territory, and moving average crossovers. Chart patterns, like the head and shoulders or ascending triangle, also provide strong clues.
Why is the 20-day EMA important in technical analysis?
The 20-day Exponential Moving Average is a widely watched short-term trend indicator. Prices trading above it are generally considered bullish, while sustained trading below it can indicate bearish momentum. It often acts as dynamic support in an uptrend and resistance in a downtrend.
What is an ascending triangle pattern?
An ascending triangle is a bullish continuation pattern characterized by a flat top resistance line and a rising lower trendline. It indicates that buyers are becoming more aggressive. A breakout above the resistance with high volume confirms the pattern and often leads to a significant move higher.
How does Bitcoin's price movement affect altcoins?
Bitcoin is often considered the market leader for cryptocurrencies. When Bitcoin experiences significant price movements—either up or down—it tends to have a strong correlative effect on altcoins. A strong, bullish Bitcoin breakout often increases overall market confidence and capital flow into altcoins.
What should I consider before entering a cryptocurrency trade?
Always conduct your own research, analyze both technical charts and fundamental project news, define your risk tolerance and position size, and have a clear exit strategy for both profit-taking and stop-loss scenarios. 👉 Explore advanced trading strategies to better manage your portfolio.