Bitcoin faces the risk of dropping below $105,000 on Monday as U.S.-China trade negotiations could set the tone for the week. Ethereum shows weakened control near its 200-day Exponential Moving Average, potentially continuing its decline below $2,500. Ripple's XRP struggles to break through the 50-day EMA amid a double-bottom reversal, risking a pullback toward $2.00.
The broader cryptocurrency market saw minor gains on Monday, though underlying weakness is emerging. Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are encountering resistance after a modest weekend rebound, suggesting a potential reversal similar to Thursday’s flash crash.
Scheduled U.S.-China trade talks in London on Monday serve as a high-volatility catalyst that could trigger sharp price movements, as seen during the May 12 discussions in Geneva. The previous 90-day tariff truce sparked a rapid rally in the S&P 500, while Bitcoin’s reaction lagged.
Ahead of talks between Trade Secretary Scott Bessent and Vice Premier He Lifeng, short-term softness in crypto markets warns that investors may take speculative correction measures. This indicates that traders are taking profits to hedge against potential volatility from high-stakes meetings.
Bitcoin Risks Double-Top Reversal Toward $100K
Bitcoin consolidated above $105,000 for two days, recovering part of Thursday’s steep decline. At the time of writing, BTC trades at $105,621, falling short of breaking the $106,058 resistance level, which marks December’s highest close.
Price action suggests a potential double-top reversal, compounded by a short-term resistance trendline. Traders hoping for a continued bullish trend should wait for a daily close above $106,058 to avoid false breakouts.
A successful breakout could extend Bitcoin’s upward move toward its all-time high of $111,980.
Investors should monitor the Moving Average Convergence Divergence (MACD) indicator for buy signals. A crossover of the blue line above the red line, along with green histogram bars rising above the zero line, would indicate strengthening upward momentum.
However, the Relative Strength Index (RSI) is moving sideways near 53, close to the midline, reflecting ongoing uncertainty. Notably, the absence of divergence between recent RSI peaks and Bitcoin’s potential double-top formation limits immediate bearish risks.
On the flip side, rising uncertainty from the London negotiations could push Bitcoin to retest the $100,718 support level, last touched during Thursday’s low.
Ethereum Loses Grip Near 200-Day EMA
Ethereum extended its decline on Monday, falling below $2,500 with a loss of nearly 1%. The price action suggests a possible reversal, marked by an evening star pattern—a Saturday gain of 2% followed by a Doji candle on Sunday.
Notably, Ethereum failed to reclaim the $2,600 support level lost during Thursday’s crash, indicating strong selling pressure. Investors should remain cautious as momentum indicators point to increasing sell-side activity.
The MACD and its signal line are trending downward toward the zero line, while the red histogram spikes below it, suggesting a bearish trend. The daily RSI is moving toward the midline, deviating from Ethereum’s sideways price movement. This bearish divergence warns of a steeper correction.
If the largest altcoin closes below the 200-day Exponential Moving Average (EMA) at $2,461, traders may consider short opportunities, targeting the next support at the 50-day EMA near $2,357.
Conversely, a bullish reversal could face resistance near $2,700, potentially forming multiple peaks throughout May.
Ripple’s XRP Struggles Below 50-Day EMA
XRP fell nearly 2% in Monday trading, failing to break above the dynamic resistance of the 50-day EMA. For nearly two weeks, XRP has been trading between the 200-day and 50-day EMAs.
Despite a 4% gain on Sunday, the consolidation phase failed to confirm a double-bottom reversal. With intraday declines, XRP is retreating toward the 200-day EMA at $2.08, suggesting further downside in the coming days.
However, traders should monitor the MACD closely, as the blue line approaches a crossover above the red line, which could trigger a buy signal. Additionally, the RSI is rebounding near 48 and moving toward the midline, indicating recovering bullish momentum.
A daily close above the 50-day EMA at $2.25 could propel XRP toward May’s highest close near $2.58.
On the downside, a close below $2.08 could extend the correction toward the $1.79 support level, which was April’s lowest close.
Frequently Asked Questions
What is a double-top reversal in trading?
A double-top reversal is a bearish technical pattern that forms after an asset reaches two consecutive peaks at a similar price level. It often signals a trend reversal from bullish to bearish and is confirmed when the price breaks below the support level between the two peaks.
How do trade talks affect cryptocurrency prices?
Trade negotiations between major economies like the U.S. and China can influence market sentiment, risk appetite, and macroeconomic expectations. Positive outcomes may boost traditional markets and risk assets like cryptocurrencies, while tensions or stalemates can lead to volatility and sell-offs.
What are key indicators to watch in crypto trading?
Common technical indicators include moving averages (e.g., 50-day and 200-day EMA), MACD, and RSI. These help traders identify trends, momentum, and potential reversal points. Fundamental factors like regulatory news and institutional adoption also play crucial roles.
Why is the 200-day EMA important?
The 200-day Exponential Moving Average is widely watched as a long-term trend indicator. Prices above it often suggest a bullish trend, while breaks below may indicate bearish momentum. Traders use it to gauge market sentiment and potential support/resistance levels.
What is leverage trading in cryptocurrencies?
Leverage trading allows investors to borrow funds to amplify their trading positions, potentially increasing gains or losses. While it offers higher profit opportunities, it also carries significant risk, including the possibility of losing more than the initial investment.
How can investors manage risk in volatile markets?
Risk management strategies include setting stop-loss orders, diversifying portfolios, avoiding over-leverage, and staying informed about market news and technical indicators. 👉 Explore more strategies to protect your investments during high-volatility periods.
Disclaimer: This content is for informational purposes only and is not intended as investment advice. Readers should conduct their own research and consult with a independent financial advisor before making any investment decisions. Trading cryptocurrencies involves risk, including potential loss of capital.