In the past seven days, the crypto market has seen an increase in volatility, as prices for Bitcoin (BTC) and Dogecoin (DOGE) have risen more simply because of social media activity. In situations like these, traders who make their investment decisions based on emotions tend to incur heavy losses and that is exactly what happened last week.
Dogecoin’s recent pump and dump (DOGE) caused several new merchants who bought due to FOMO to lose money in a short period of time and this scenario is likely to repeat, as social media groups have decided that collective altcoin bombs are a new investment method.
A similar trend seems to be developing currently in Bitcoin (BTC), which has reconstituted a large part of the bullish movement that was caused due to the “Elon bomb” on 29 January. This shows that, except for a few emotional buyers, most professional traders may have used the bull to ease their long positions.
Stack Funds head of research, Lennard Neo, believes that Bitcoin miners are selling high and that the trend may continue as the Chinese New Year holiday approaches. Neo expects Bitcoin’s price to remain volatile in the near term.
Even with Bitcoin price consolidation, decentralized financial tokens continue to increase, which suggests that traders’ focus has shifted to the DeFi space. Let’s look at the charts of the top 5 cryptocurrencies that may be trending in the coming days.
BTC / USD
Bitcoin’s long fuse on January 29 shows that bears aggressively sold the bullish above the bearish trendline of the downward triangle. This was followed by a Doji candle pattern on January 30, indicating indecision between bulls and bears.
The bulls’ failure to push the price above the downtrend line today has attracted more sales. The bears are trying to keep the price below the 20-day exponential moving average ($ 33,395).
If they are successful, the BTC / USD pair may drop to the 50-day simple moving average ($ 30,631) and then to $ 28,850.
A split and close below $ 28,850 will complete the bearish downward triangle pattern that has a target target of $ 15,741. However, it is unlikely to be a direct drop because bulls will try to contain the 50% decline in the Fibonacci retracement level at $ 25,897.42 and again at the 61.8% retracement at $ 22,106.73.
This negative view will be invalidated if the price rises from the current level or recovers from the $ 28,850 support and holds above the downtrend line. Such a move will suggest a strong build-up at lower levels, which could result in an increase to $ 40,000.
The 4-hour chart shows that the break above the downtrend line encountered strong selling pressure and the price quickly retracted into the triangle.
The bulls’ failure to push the price back above the downtrend line has attracted sales and the bears have pulled the price below the MME 20. The bulls are currently trying to defend the 50-SMA, but if this support also breaks, the pair can start their journey to $ 28,850.
This negative view will be invalidated if the price rebounds from the current level and rises above the downtrend line. Such a move could push the price to $ 38,519.63.
ETH / USD
Ether (ETH) broke above the $ 1,400 resistance on three previous occasions, but the bulls have failed to sustain the breach, which shows profit reserves at higher levels. However, the good thing is that the bulls have not given up much ground in the past few days. This shows that bulls are accumulating casualties.
The ETH / USD pair formed a Doji candlestick pattern on January 30, indicating uncertainty. That indecision was resolved on the downside today and the pair may now fall to the 20-day EMA ($ 1,253), which is expected to act as a strong support.
A rebound in support will suggest that sentiment remains bullish and traders are buying lower. Optimists will try to resume the upward trend. If the bulls manage to raise the price above the $ 1,400 to $ 1,473,096 resistance zone, the pair could rise to $ 1,675 and then to $ 2,000.
This upward view will be invalidated if bears sink the price below the 20-day EMA and upward trend line. In that case, the pair may fall to the 50-day SMA ($ 990).
The 4-hour chart shows the formation of a rising triangle pattern, which will end in a breach and close above $ 1,440. This optimistic configuration aims to target $ 1,768.
However, the moving averages flattened out and the relative strength index (RSI) is just below the midpoint, which suggests a balance between supply and demand.
If the bears sink the price below the triangle’s support line, this will invalidate the pattern. The next support on the negative side is the uptrend line and then $ 1,050.
UNI / USD
Uniswap (UNI) is in a strong uptrend that has pushed the RSI deeply into overbought territory. Although the RSI may remain overbought for a long period, traders should be cautious, as corrections to overbought levels can be quick and abrupt.
The first support on the downside is the 38.2% Fibonacci retracement level at $ 15.3963. If the price recovers from this level, it will suggest that bulls are aggressively buying the falls and are not waiting for a deeper correction to enter.
If bulls manage to raise the price above $ 20.5612, the UNI / USD pair could rise to $ 28 and then to $ 32. Both moving averages are rising and the RSI is above 79, indicating that bulls are at control.
However, if the correction goes below $ 15.3963, the next support is at the 20-day EMA ($ 11.85), which is close to the 61.8% Fibonacci retracement level at $ 12.2054 . A deeper fall generally delays the start of the next leg of the bullish trend.
The 4-hour chart shows that the pair made a flag pattern. If bulls manage to push the price above the flag, the bullish trend may resume and the pair may rise to $ 22 and then to $ 25.
Another possibility is that the pair will continue to correct and fall to the 20-EMA. If the price recovers from that support, it will suggest that sentiment remains positive and that bulls are buying in small drops.
During the current leg of the bullish trend, the price has repeatedly supported the 20-EMA. Therefore, a break below the 20-EMA will suggest that the bullish sentiment may be easing and could result in a drop to $ 15.3963 and then to the 50-SMA.
ATOM / USD
Cosmos (ATOM) has formed a cup and handle pattern that will be completed in a breakout and will close above $ 8,877. If bulls can push the price above the $ 10.20 resistance, the bullish trend could begin.
The first positive target is $ 11,151 and the next level to watch for is $ 13,554. The rising moving averages and the RSI jump from the midpoint suggest that bulls are at an advantage.
If the bears sink the price below the 20-day EMA ($ 7.65), the ATOM / USD pair may remain in the range between $ 6.603 and $ 8.877 for a few more days.
The bullish assumption will be denied if the bears sink and keep the price below the 50-day SMA ($ 6.4). Such a move could reduce the price to $ 5.50 and then to $ 4.50.
The 4-hour chart shows that bulls pushed the price above the downward trend line of the descending triangle. This invalidated the bearish configuration, but the bulls are struggling to push the price above the $ 8,877 resistance.
The flat moving averages and the RSI near the midpoint suggest that the pair may remain in the range between $ 8,877 and $ 6,726 for some time. If bulls can boost the price above $ 8,877, the pair could rise to $ 10.20, while a break below $ 6.726 will suggest that bears are trying to make a return.
COMP / USD
Compound (COMP) completed a lower rounding pattern on January 29, when it broke and closed above the $ 272.61 resistance. This rollback setup has a target target of $ 464.60.
Rising moving averages and RSI near overbought territory suggest that bulls are in charge. After a pattern breaks, the price usually retraces and retests the break level, but if the trend is too strong, it just consolidates or enters a small correction before resuming the bullish movement.
If the COMP / USD pair rebounds from $ 272.61, it would suggest that the bulls have turned the previous resistance into support. This could act as a launch pad for the next leg of the bullish trend.
This positive view will be invalidated if the bears sink and keep the price below $ 272.61. Such a move will indicate profit reserves at higher levels and a lack of purchases at lows.
The 4-hour chart shows that traders posted profits close to $ 340, but the correction was short-lived as the price rose from $ 304.84. If the bulls can now raise the price above $ 340, the pair could rise to $ 405.
On the other hand, if the price drops again from $ 340, the pair could fall to 20-EMA. If the price recovers from that support, the bulls will try to resume the bullish movement again, but if the bears sink the pair below the 20-day EMA, a fall to $ 272.61 will be on the cards.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you must conduct your own research when making a decision.