bitcoin (BTC) has been trading in a tight range since Thanksgiving Nov. 24 as traders are uncertain about the next directional move. Usually, in a bear market, analysts tend to go ultra-bearish and project targets that tend to scare off investors.
Bitcoin’s failure to initiate a strong recovery has resulted in multiple downside targetswhich extend to $6,000 on the downside.
While anything is possible in a bear market, traders with a long-term view might try to accumulate fundamentally strong coins in multiple tranches. Because a bottom will only be confirmed in hindsight and trying to time it is usually an exercise in futility.
In a bear market, not all coins bottom at the same time. Therefore, while keeping an eye on the broader cryptocurrency market, traders should follow their coins of choice closely.
Cryptocurrencies that take the market out of the bearish phase generally tend to do well when the next bull market begins. Let’s look at the charts of cryptocurrencies trying to start a short-term upward move.
Bitcoin has consolidated between $15,588 and $17,622 in recent days. The Relative Strength Index (RSI) has formed a bullish divergence, suggesting that selling pressure may be easing.
The relief rally may face strong resistance in the area between the 20-day exponential moving average ($17,065) and $17,622. If the price drops from the overhead zone, the BTC/USDT pair could extend its stay in the range for a while.
If the buyers catapult the price above the overhead zone, it will suggest that the downtrend may end. The 50-day simple moving average ($18,600) may be a minor hurdle, but if breached, the upside could reach the psychological level of $20,000.
Alternatively, if the price turns lower from overhead resistance and breaks below $15,588, it could signal a resumption of the downtrend. The pair could then fall to $13,554.
The moving averages on the 4-hour chart have flattened out and the RSI is near the midpoint, indicating a balance between supply and demand. This balance could tip in favor of the bulls if they push the price above $17,000. The pair could then reach the overhead resistance at $17,622.
Instead, if the price slips below $16,000, the pair could fall to the critical support zone between $15,588 and $15,476. A break below this zone could accelerate selling and initiate the next leg of the downtrend.
Dogecoin (DOGE) broke above the overhead resistance at $0.09 on November 25, but the bears pulled the price back below the November 26 level. The buyers regrouped and pushed the price above the 38.2% Fibonacci retracement level of $0.10 on November 27.
The bears might again try to stop the rally near $0.10, but if the bulls don’t allow the price to break below $0.09, the DOGE/USDT pair might gain momentum and head higher towards the 61.8% Fibonacci retracement level of $0.12. If this level is also scaled, the pair might continue its uptrend towards $0.16.
On the other hand, if the price is falling from the current level, it will suggest that the bears continue to view the rallies as a selling opportunity. The pair could then drop to $0.09. If this support gives way, the 50-day SMA ($0.08) could be challenged.
The buyers pushed the price above the range suggesting the start of a move higher. The strong recovery pushed the RSI to deeply overbought levels, suggesting a minor correction or consolidation in the near term.
If the price declines from the 38.2% Fibonacci retracement of $0.10 but rebounds from the breakout level, it will suggest that sentiment has turned positive and traders are buying lower. The bulls will then attempt to resume the uptrend. The target objective for the range breakout is $0.12.
This positive view could be invalidated in the short term if the price drops and re-enters the range. The pair could then drop to the 50-SMA.
Litecoins (SLD) A break above the overhead resistance at $75 is the first indication of a potential trend change. The bears attempted to pull the price back below $75 and trap the aggressive bulls, but the buyers held firm.
The bulls will attempt to propel the price above the overhead resistance at $84. If they succeed, it could signal the start of a new uptrend. The rising 20-day EMA ($67) and the RSI near the overbought zone indicate that the path of least resistance is to the upside. The LTC/USDT pair could then rise towards the target objective of $104.
Conversely, if the price drops from $84, the pair could slide towards the $73-$75 support zone. If this zone breaks down, the pair could slide towards the 20-day EMA. The bears will have to pull the price below this support to trap the aggressive bulls.
If the price bounces off the 20-day EMA, the bulls will again try to push the pair above $84 and start the uptrend.
The 4-hour chart shows that the price broke and closed below the 20-EMA, but the bears were unable to capitalize on this advantage. The bulls bought this dip and took the price back above the 20-EMA. Both moving averages are up and the RSI is just above the midpoint, indicating that the buyers have a slight advantage.
There is minor resistance at $80, but if the bulls push the price above this level, the pair could rise to $84. The pair could then attempt a rally to $96. If the bears want to invalidate this short-term view, they will need to pull the pair below $73.
Chain link (LINK) has been ranging between $5.50 and $9.50 over the past few weeks. The strong rebound from the support at $5.50 on November 21 suggests that bulls are aggressively buying dips at this level.
The 20-day EMA ($6.74) started to rise and the RSI moved into positive territory, indicating a minor upside for the bulls. If the price holds above the 50-day SMA ($7.15), the likelihood of a rally to $8.50 and then to $9.50 increases.
Contrary to this assumption, if the price declines and breaks below the 20-day EMA, it will suggest that the bears are active at higher levels. The LINK/USDT pair could then head back down towards the support at $5.50 and consolidate nearby for a few more days.
The strong rebound from the $5.50 level is approaching the broad resistance at $7.50. If the price declines from this level and breaks below the 20-EMA, the pair could drop to the 50-SMA. A break below this support could keep the pair stuck between $5.50 and $7.50 for some time.
Another possibility is that the price drops from $7.50 but bounces off the 20-EMA. The bulls will then try again to push the price above $7.50 and begin the march north towards $8.50.
ApeCoin (MONKEY) has consolidated in a wide range between $3 and $7.80 over the past few months. The bears attempted to drop the price below the range support but were unable to sustain the lower levels. This suggests strong demand at lower levels.
Sustained buying pushed the price above the 20-day EMA ($3.47) on November 26, indicating that the bulls are back. There is minor resistance at the 50-day SMA ($4.06), but if the bulls break through this roadblock, the APE/USDT pair could reach the downtrend line.
If the price declines from the downtrend line, the pair could decline to the 20-day EMA. If the pair bounces off this level, it will suggest that sentiment has shifted from selling on the rallies to buying on the declines. This could improve the outlook for a break above the downtrend line. The pair could then climb to $6.
On the contrary, if the price declines from the downtrend line and crosses below the 20-day EMA, the pair could once again slide towards the strong support at $3.
The moving averages on the 4-hour chart have started to rally and the RSI has jumped into the overbought territory, indicating that the bulls have a slight advantage. The rally might face resistance at $4, but if the bulls don’t allow the price to dip below the moving averages, the upside move might hit the downtrend line.
This positive view could be invalidated in the short term if the price declines and breaks below the 50-SMA. Such a move will suggest that the bears continue to sell on the rallies. The pair could then fall to $3.
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 should conduct your own research when making a decision.