Select altcoins are moving higher as Bitcoin price gains strength and consolidates within a bull pennant.
Bitcoin’s (BTC) price has been hovering near the $19,000 level for the past few days. Whenever the price consolidates near the all-time high, it is an indication of strength.
However, the question troubling investors is whether Bitcoin will source enough momentum to pull above $20,000 or will it witness a sharp correction in the short term. At the moment, analysts are divided on their expectations about the next move.
While the near-term remains uncertain, on-chain analyst Willy Woo believes that the long-term picture is more bullish than ever. According to Woo, Bitcoin is going through a re-accumulation phase, which is one of the main reasons why the price has not seen volatile corrections during its current up-move to the all-time high. Woo expects Bitcoin to reach $200,000 by the end of 2021.
Man famous investors have been vocal about their expectations of higher prices in Bitcoin. However, it is by no means the only cryptocurrency on the institutional investors’ radar. Grayscale managing director Michael Sonnenshein in a recent interview with Bloomberg said that “Ethereum first and in some cases Ethereum only” investors are on the rise.
The inflow of funds into Ether (ETH) shows that institutional investors are adding more cryptocurrencies to their portfolio. This is a positive sign as it shows increased confidence of the investors in the crypto space.
As the sentiment remains bullish, let’s study the charts of the top-five cryptocurrencies that could start a trending move this week.
The bears are aggressively defending the $19,500 to $20,000 zone for the past few days, but they haven’t been able to sink Bitcoin below the 20-day exponential moving average ($18,188). This suggests that the bulls are buying on every minor dip.
The BTC/USD pair has formed a pennant near the overhead resistance zone. Both the moving averages are sloping up, which suggests that the bulls have the upper hand and the path of least resistance is to the upside.
If the bulls can push and sustain the price above the pennant, the next leg of the uptrend could begin. The first target objective on the upside is $21,140 and then $23,043.
This bullish view will be invalidated if the bears sink the price below the pennant. In that case, there is a minor support at the 20-day EMA and if that breaks, the pair could drop to $17,200.
The negative divergence on the RSI is the only bearish development, which suggests that the momentum may be weakening. However, until the price dips below the 20-day EMA, the advantage will not shift in favor of the bears.
The 20-EMA on the 4-hour chart has flattened out and the RSI has dipped to the midpoint. This suggests a balance between supply and demand.
The bulls are buying the dips to the support line of the pennant while the bears are selling the rallies to the resistance line of the pennant.
As neither the bulls nor the bears have a clear advantage, it is better to wait for the price to break above or below the pennant before considering a fresh position.
Ether strongly rebounded off the 20-day EMA ($555) on Dec. 5, which shows accumulation by the bulls at lower levels. The buyers will now try to push the price above the $622.807 to $635.456 overhead resistance zone.
If they succeed, the ETH/USD pair could resume the next leg of the uptrend that can reach $800. The upsloping moving averages suggest that the bulls have the upper hand.
However, the bears are unlikely to give up without a fight. They have aggressively defended the $622.807 resistance since Nov. 24, and will again try to turn the price down from this resistance.
If the sellers can sink and sustain the price below the 20-day EMA, the pair could drop to $488.134. The RSI has formed a bearish divergence, which suggests that the momentum has weakened.
The 4-hour chart shows the formation of a bullish ascending triangle pattern that will complete on a breakout and close above $622.807. This setup has a target objective of $763.61.
The bears are currently attempting to sink the price to the trendline of the triangle. If this support cracks, it will invalidate the bullish setup.
However, if the price rebounds off the trendline, the bulls will once again try to propel the price above the overhead resistance. If they succeed, the next leg of the up-move could begin.
Monero (XMR) has been trading near the $135.50 overhead resistance for the past four days. The altcoin has formed an inverse head and shoulders pattern, which will complete on a breakout and close above $135.50. This bullish setup has a target objective of $167.
While the 20-day EMA ($126) is rising, the 50-day simple moving average ($122) is flat and the RSI is just above the midpoint suggesting a balance between supply and demand.
The bulls will gain the upper hand after the price sustains above $135.50 and the bears will be at an advantage if the price dips below the 50-day SMA.
On the downside, the first support is at $110 and below that $105. A break below this support could start a new downtrend.
The bulls are currently attempting to push VeChain (VET) above the $0.01755 overhead resistance. If they manage to sustain the price above the resistance, the altcoin will complete a rounding bottom pattern.
The rising moving averages and the RSI in the positive zone suggest that bulls are in command. On a close above the overhead resistance, the rally may reach $0.02292 and then the pattern target of $0.02618.
However, the bears may have other plans. If they can sink the price below the 20-day EMA ($0.0150), the VET/USD pair could drop to $0.014 and then to the 50-day SMA ($0.0125).
On the contrary, if the pair rebounds off the 20-day EMA, the bulls will make another attempt to push the price above the overhead resistance.
AAVE is currently in an uptrend as it has been making a higher high and a higher low pattern. The rising 20-day EMA ($74) and the RSI in the positive territory suggest that bulls are in control. If they can push the price above $94.875, the altcoin could rally to $124.075.
However, the bears have been defending the $94.875 resistance for the past three days. If they can sink the price below $79.20, the AAVE/USD pair could drop to the 20-day EMA. If the price rebounds off this support, the bulls will again try to resume the uptrend.
Conversely, if the price dips below the 20-day EMA, it will suggest advantage to the bears. The next support on the downside is at $69 and if this level also cracks, the decline could extend to $50.
The 4-hour chart shows that the bulls are buying the dips to the uptrend line while the bears are selling on rallies to the downtrend line.
If the bears sink the price below the uptrend line, the pair may drop to the 50-SMA and below it to $72. A break below this support could start a deeper correction.