Bitcoin may eventually try to recover, which could cause MANA, MKR, ZEC and KCS prices to rise.
Bitcoin (BTC) was relatively calm over the weekend as crypto traders try to rebuild the markets after the Terra LUNA fiasco. With macroeconomic factors not providing support, some analysts expect the recovery to be slow.
Crypto research firm Delphi Digital said in a recent report that the rally in the US dollar index (DXY) lifted its 14-month Relative Strength Index “for the first time above 70 since it rose from late 2014 to 2016.”
Historically, 11 out of 14 such cases resulted in a rise in DXY of approximately 5.7% over the next 12 months. If the inverse correlation between DXY and bitcoin remains unchanged, this could create problems for crypto investors.
Daily view of cryptocurrency market data. Source: Coin360
Arthur Hayes, former CEO of crypto derivatives platform BitMEX, stated in his latest blog post that the crypto markets “need to be given time to recover” from the bloodbath. He said that if Bitcoin falls to $20,000 and Ether (ETH) to $1,300, he will be a buyer.
While the cryptocurrency markets are in a downtrend, occasional bear market rallies can provide short-term trading opportunities. Let’s take a look at the charts of the top 5 cryptocurrencies that could bounce as sentiment improves.
Bitcoin/US dollar
Bitcoin tried to rebound strongly on May 13, but the long wick on the daily candle suggests that the bears are not in the mood to give up their advantage. However, with a slight advance, the bears failed to keep the price below the critical support at $28,805.
BTC/USDT daily chart. Source: Trading View
The recovery could hit a hurdle at the 38.2% Fibonacci retracement at $31,721 and again at the 20-day exponential moving average (EMA) ($33,985).
If the price deviates from any of the resistances, the bears will take their chance and try to push the BTC/USDT pair below $26,700. If they succeed, the downtrend may continue. The next support on the downside is $25,000 and then $21,800.
Contrary to this view, if buyers push the price above the 61.8% Fibonacci retracement level at $34,823, it suggests that selling pressure may ease. This could lead to a sharp rally towards the 50-day Simple Moving Average (SMA) ($39,626), where the bears are expected to mount a serious challenge again.
4-hour BTC/USDT chart. Source: Trading View
The bulls are buying the fall to the critical support at $28,805 while the bears are trying to stop the rally at the downtrend line. The 20-EMA has flattened out and the RSI has risen to its midpoint, indicating a balance between supply and demand.
When buyers push the price above the downtrend line, it indicates a buyer advantage. The bulls can then cut the price down to $32,659. A break and close above this level could pave the way for a possible rally to the 200-SMA.
On the other hand, if the bears take the price below $28,805, the pair could drop to $27,700. Bulls are likely to defend this support aggressively as a break below it could signal a resumption of the downtrend.
MANA/USDT
Decentraland (MANA) has been in a strong downtrend for the past few days. The bulls aggressively defended the fall to $0.60 on May 12, leading to a rally to the 20-day EMA ($1.36).
Daily MANA/USDT chart. Source: Trading View
In a downtrend, bears sell on the rise to the 20-day EMA. If the price deviates sharply from current levels, the bears will again try to test the $0.60 support. A break and close below this level could signal a resumption of the downtrend. Then the MANA/USDT pair may continue to decline to the psychological level of $0.50.
On the other hand, if the bulls are not losing much ground compared to current levels, this suggests that traders are buying on dips. This could increase the chances of a breakout above the 20-day EMA. If so, the pair could rise to the 50-day SMA ($1.94).
4-hour MANA/USDT chart. Source: Trading View
A strong bounce from the 0.60 level has risen above the 50 SMA. Although the bears tried to take the pair lower, the bulls bought the fall to the 20-EMA. This suggests that the bulls are trying to come back. Buyers will now try to push the price down to the 200-SMA, which is likely
