Bitcoin and the major altcoins have recovered from their immediate support levels, paving the way for a potential recovery rally in the near future.
US stock markets are trying to recover after several weeks of selling. Similarly, on-chain monitoring resource Material Indicators expects the crypto market to rise, but expects Bitcoin (BTC) to spend some time in a limited range before a “real breakout.”
The seven-day moving average of on-chain transaction volume tracked by Glassnode hit a nine-month low on May 23rd. This suggests that the sluggish behavior of the price of Bitcoin in 2022 has led to a reduction in the participation of traders.
Daily dynamics of the cryptocurrency market. Source: Coin360
While signs of a short-term recovery are visible, a sustainable recovery may be difficult as macroeconomic conditions remain challenging. International Monetary Fund Executive Director Kristalina Georgieva wrote in a blog post that the global economy is experiencing “the biggest test since World War II.”
Can bitcoin and altcoins break out of their immediate resistance levels and start a recovery rally? Let’s examine the charts of the top 10 cryptocurrencies to find out.
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On May 20, Bitcoin held support at $28,630, which suggests that bulls are buying at lower levels. Buyers have pushed the price above the downtrend line, which is the first sign of recovery.
BTC/USDT daily chart. Source: Trading View
If buyers hold the price above the downtrend line, BTC/USDT could rise to the 20-day exponential moving average (EMA) of $31,758. The bears are likely to defend the 20-day EMA aggressively as a break and close above it could pave the way for a possible rally to the 61.8% Fibonacci retracement level at $34,823.
Alternatively, if the price reverses down from current levels or the 20-day EMA, this would indicate that sentiment remains negative and traders will sell on the rally. The bears need to push the price below $28,630 to open the way for a possible retest of the critical $26,700 support.
Ether (ETH) bounced off the uptrend line on May 21, suggesting bulls are buying dips to that level. Buyers will now try to push the price towards the upper resistance at $2159 where the bears could become a major problem.
Daily ETH/USDT chart. Source: Trading View
If the price turns down from the upper resistance, it may fall to the uptrend line. This is an important level to keep an eye on in the short term. If the price recovers from the uptrend line, it could increase the chances of a break above $2159. In this case, the ETH/USDT pair may try to rise to $2,500.
On the other hand, if the price deviates from current levels or upper resistance and breaks the uptrend line, this would mean that the pair could be stuck between $2159 and $1700 for several days.
The bulls pushed BNB above the 20-day EMA ($324), which is the first sign that the downtrend may be ending.
BNB/USDT daily chart. Source: Trading View
If buyers hold the price above the 20-day EMA, BNB/USDT could rise to $350 and then to the 50-day Simple Moving Average (SMA) of $374. Bears may again try to stop the upward movement in this zone. If the price breaks down from this zone but recovers from the 20-day EMA, the chances of a break above the 50-day SMA increase.
This bullish outlook will be discounted in the short term if the price reverses and drops below $320. This would indicate that the bears are selling at higher levels. The pair may then gradually fall to $286.
Ripple (XRP) is trying to rebound after bulls successfully defended immediate support at $0.38 on May 19. Buyers will now try to push the price towards the 20-day EMA ($0.47).
Daily XRP/USDT chart. Source: Trading View
Declining moving averages and RSI in negative territory suggest that the bears have the upper hand. Sellers will try to vigorously defend the 20-day EMA. In this case, the XRP/USDT pair may turn down from the upper resistance and enter the market.