Bitcoin (BTC) broke below the $60K psychological support. Although this looks negative in the short term, price action continued to reverse the movement in 2017. If the similarities persist for the rest of the year, Bitcoin bulls may be in a party.
PlanB, the creator of the popular Bitcoin Stock-to-Flow (S2F) model, recently announced in a tweet that the second phase of the Bitcoin bull market has begun. The analyst believes that if the bitcoin price dynamics continue to follow the S2F pattern, a rally to $100-135,000 is possible by the end of the year.
Cryptocurrency daily market indicators. Source: Coin360
While Bitcoin is getting the bulk of the attention, crypto exchange Okcoin reported in a recent report that institutional investors’ appetite for cryptocurrencies other than Bitcoin is on the rise. The report says that 53% of institutional investors’ purchases in September were made in altcoins.
Is the current Bitcoin drop a buying opportunity or the start of a deeper correction? How are altcoins expected to respond? Let’s analyze the charts of the top 10 cryptocurrencies to find out.
BTC / USDT
Bitcoin failed to test the upper resistance area between $64,854 and $67,000 on October 25, which could cause short-term traders to turn a profit. This pushed the price lower to strong support at the 20-day exponential moving average (EMA) ($58,948).
BTC/USDT daily chart. Source: TradingView
The breakout and close within the 20-day moving average will be the first indication that bullish momentum may be waning. If the bulls fail to get back to the level quickly, sales could accelerate and BTC/USDT could drop to $52,920.
The Relative Strength Index (RSI) has fallen to its midpoint and the 20-day moving average is flattening, indicating a balance between supply and demand.
This advantage will tilt in favor of the bears if the pair slips and stays below the 50-day simple moving average (SMA) ($51,556). On the other hand, a breakout to a new all-time high would signal the bulls’ return to power.
ETH / USDT
The bulls attempted to resume the rally in Ether (ETH) on October 26 and 27, but failed to sustain the price above $4,200. This indicates that the bears are active at higher levels.
ETH/USDT daily chart. Source: TradingView
The sellers pushed the price to the 20-day moving average ($3869), which is an important support to watch. The sharp drop from the 20-day moving average indicates that sentiment remains positive and that traders are buying in deflationary periods. The bulls will then try to resume the trend again.
Conversely, if the 20-day exponential moving average explodes, this indicates that traders can make a profit and that supply is outstripping demand. The bears will then attempt to pull the price to the 50-day moving average ($3488).
BNB / USDT
Binance Coin (BNB) has deviated from the upper resistance and broke the 20-day moving average today ($462). This is the first sign that an uptrend is likely to reverse.
BNB/USDT daily chart. Source: TradingView
The long tail of today’s candle shows that the bulls are trying to protect the neck on the inverted head and shoulder pattern.
If they succeed, the BNB/USDT pair may attempt to climb again to the upper resistance at $518.90. A breakout and a close above this resistance may signal a resumption of the uptrend.
Conversely, a neck closing could push the price towards the 50-day moving average ($423). If this support is broken, the next stop might be $392.20. Flat moving averages and RSI near their midpoint do not indicate a clear advantage for bulls or bears.
ADA / USDT
The narrow Cardano Range (ADA), which is trading between the 20-day moving average ($2.15) and the symmetrical triangular support line, was released on October 27. This indicates that the bears have asserted their superiority.
ADA/USDT daily chart. Source: TradingView
The sellers pushed the price below $1.87 on October 27, but the long tail of the candle indicates that the bulls are trying to defend the support. An attempt at a correction is likely to encounter strong resistance at the 20-day moving average.
If the price reverses from the 20-day EMA, the bears will attempt to break the $1.87 support again. If this happens, the ADA/USDT may resume its descending move towards the target pattern at $1.58.
Bulls should push the price and keep it above the triangle resistance line to eliminate the negative outlook.