After last week’s nearly 20% rally, Bitcoin (BTC) is on track to end the week with a roughly 10% gain. The Bitcoin rally has boosted sentiment and attracted interest in buying some altcoins. This sent the total crypto market capitalization firmly above the $1 trillion mark.
The strong recovery in Bitcoin has surprised some analysts who remain skeptical of the rally. Some believe that the current rally is a dead cat bounce that will quickly reverse direction, while others see similarities between the current rally and the bear market recovery of 2018.
Although traders should be prepared for any possibility, the rate of increase of Bitcoin does not indicate the underlying probability. There are likely to be bumps in the road but dips are likely to be aggressively bought by traders.
Bitcoin’s ongoing recovery can encourage buying in selected altcoins.
Let’s study the Bitcoin chart and pick the altcoins that are showing strength in the near term.
BTC/USDT
Bitcoin rose above the overhead resistance of $21,650 on January 20, indicating a resumption of the up-move. This suggests that demand remains strong at higher levels.
The bull pushed the price above the $22,800 resistance on January 21 but failed to build a breakout as seen from the long axis of the candlestick today.
While the upsloping moving average indicates that the bulls are in command, the relative strength index (RSI) in the overbought area warrants caution. This suggests that a few days of consolidation or a minor correction is possible.
However, when a new uptrend starts, the RSI sometimes tends to stay in the overbought zone and disturb the bears. If this happens, the uptrend could continue without a major pullback and the pair could reach $25,211.
On the downside, the first support is at $21,480. If the price rebounds from this level, it will suggest that bulls buy at every minor dip. That could increase the possibility of a rally to $25,211.
The 4-hour chart shows that the bulls are trying to turn the $22,800 level into support. If the price continues higher and rises above $23,271, the bullish momentum may pick up and the pair may rush to $25,211.
If the price breaks down and falls below $22,600, the pair can slide to the 20 exponential moving average. This level may be a support but if bears can pull the price below, the next stop could be $21,480.
APE/USDT
ApeCoin (APE) has fluctuated between $7.80 and $3 over the past few months. After the bears failed to sink the price below the range, the bulls tried to make a comeback. They will try to propel the price to the resistance of the range.
The upsloping moving average and RSI in the overbought area indicate that buyers have the upper hand. There is minor resistance near $6.40 but if buyers bulldoze through it, the APE/USDT pair can rise to $7.80. This level can witness aggressive selling by bears.
The positive view may be invalidated in the near term if the price declines and falls below the 20-day EMA ($4.80). That could drop the price to the 50-day simple moving average ($4.17).
The 4-hour chart shows that the pair is in a strong uptrend. Bears try to stall the upward move at $6 but the positive sign is that the bulls have not given up much ground. This shows that every little dip is being bought. The bulls will now try to push the price above $6 and continue the uptrend.
Conversely, bears will try to pull the price below the 20-EMA. If they succeed, the pair can pull profit-booking from the short-term bull. The pair can then drop as low as $5.
MANA/USDT
Decentraland (MANA) rallied strongly from $0.28 on December 30 to $0.78 on January 21, which shows a strong momentum in favor of the bulls.
Bears sold a break above $0.74 on January 17 but bulls stepped in and bought the dip at $0.61. This suggests that sentiment remains positive and traders see the decline as a buying opportunity.
Bulls need to maintain the price above $0.74 to signal the start of the next recovery. The MANA/USDT pair could rise to $0.87 and then go to the psychological barrier at $1.
If the bears want to gain the upper hand, they need to drop the price below $0.61. If they do, the pair could start a deeper correction to $0.53.
The 4-hour chart shows the formation of an inverse head and shoulders pattern. If the buyers push the price above the neckline of the pattern, the setup will be completed and the pair can spurt to the target level at $0.93.
On the contrary, if the price falls from the current level and breaks below the moving average, it will suggest that the bears strongly maintain the resistance of $0.74. The pair could then plunge into the $0.61 to $0.55 support zone.
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AAVE/USDT
Aave (AAVE) broke and closed above the downtrend line on January 17 signaling a potential trend reversal. Bears tried to pull the price back below the downtrend line on January 18 but the bulls remained weak.
Upsloping 20-day EMA ($74) and RSI in overbought territory indicate that bulls have an edge. This advantage could strengthen further with a break above $92. The AAVE/USDT pair could then rally to the psychologically important $100 level.
This level may be a strong challenge for buyers, but if they can overcome this obstacle, the pair can go up to $115.
Contrary to this assumption, if the price falls and dives below the downtrend line, it will signal that the bear is active at a higher level. The advantage may be tilted to the bears on a slide below the 20-day EMA.
The 4-hour chart shows that the bears are defending the zone between $88 and $91 but have not been able to pull the price below the moving average. This indicates a bullish sentiment where traders are buying dips.
The bulls will make one more attempt to clear the overhead zone. If it pulls out, the pair could continue its uptrend.
However, if the bull fails to push the price above $91, the bear will try to tug the pair below the moving average. The pair could then drop to $78 and later to $73.
FILE/USDT
Filecoin (FIL) broke above the downtrend line on January 14 and held a retest of the breakout level on January 18. This indicates that the bull has flipped the downtrend line to support.
The moving average has completed a bullish crossover and the RSI is in overbought space, signaling that the bulls are in control. The FIL/USDT pair could rally to $6.50 where the bears could once again add a strong defense. If the bulls kick the price above this level, the upside can reach $9 with a short stop near $7.
The 20-day EMA ($4.24) is an important support to watch out for as a drop below it could lead to gains for the bears.
Bears tried to prevent a relief rally at $5 but bulls pierced this resistance and started the next leg of recovery. The upsloping moving average and RSI in the overbought zone show that the strong bulls are in the driver’s seat. Buyers will try to nudge the pair to $6.50 and then $7.
On the downside, the 20-EMA is a critical support to pay attention to. If the price rebounds from this level, it will indicate that the uptrend remains intact. On the other hand, if the bears drag the price below the moving average, the pair can fall to $4.20.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.