Crypto traders expect a range expansion once the Jackson Hole symposium is complete and the Fed’s perspectives on inflation, interest rate hikes and the health of the economy are made public.
Bitcoin (BTC) and several major cryptocurrencies have been trading sideways as traders avoid taking large bets before the United States Federal Reserve's Jackson Hole Economic Symposium, which begins on Aug. 25. The volatility is likely to soar as investors get some clarity on the Fed's stance in the next few days.
On Aug. 23, a team led by Goldman Sachs chief economist Jan Hatzius said that Fed chair Jerome Powell could sound dovish when he speaks on Aug. 26, reiterating that the central bank may move at a slower pace in future meetings. The analysts expect the Fed to raise rates by 50 basis points in the September meeting, which would be less than the 75 bps hike done in June and July.
Although the short-term price action remains uncertain, on-chain data suggests that Bitcoin may be undervalued, meaning it could provide strong returns if history repeats itself. According to Jarvis Labs resident analyst JJ, Bitcoin’s Market Capitalization versus Realized Capitalization indicator reading is at its lowest level since 2015. Bitcoin’s bottom in 2015 and 2019 formed when the indicator reached a low reading, but that has reached extremely low levels in 2022.
What are the critical levels to watch on the upside and the downside? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin has been trading near the support line of the ascending channel since Aug. 19. Although the bulls have defended the support successfully, they have failed to achieve a strong rebound off it. This indicates that demand dries up at higher levels.
The 20-day exponential moving average (EMA) ($22,523) has started to turn down and the relative strength index (RSI) is near 41, indicating that bears have a slight edge. If the price breaks below the support line of the channel, the selling could intensify and the BTC/USDT pair could drop to $18,900.
To invalidate this negative view, the bulls will have to push and sustain the price above the moving averages. If they do that, it will suggest that the pair could gradually climb to the resistance line of the channel near $26,000.
The bulls are aggressively defending the 50-day simple moving average (SMA) ($1,571), as seen from the long tail on the Aug. 22 and 23 candlestick. Ether (ETH) will now attempt to rise above the 20-day EMA ($1,712).
If that happens, the ETH/USDT pair could pick up momentum and rise toward the stiff overhead resistance near $2,000. The bears are expected to defend this level aggressively.
Contrary to this assumption, if the price turns down from the overhead resistance, it will suggest that bears are attempting to flip the 20-day EMA into resistance. The pair could then remain stuck between the moving averages for a few more days.
If the price breaks below the 50-day SMA and the $1,500 support, the selling could pick up momentum and the pair may plummet toward the strong support at $1,280.
A tight squeeze is usually followed by an expansion in volatility but it is difficult to preempt the direction of the breakout with certainty. Therefore, it is better to wait for the breakout to happen before initiating fresh positions.
BNB' rebound off the $275 level has been facing stiff resistance at the 20-day EMA ($301). A minor positive is that the bulls have not given up much ground as they expect the up-move to continue.
If the price turns up from the current level and breaks above $305, the BNB/USDT pair could rise toward the overhead resistance at $338. Such a move will form an inverse head and shoulders pattern, which will complete on a break and close above $338.
If that happens, the pair could rally to $420 and then to $460. The pattern target of this bullish setup is $493.
Alternatively, if the price turns down sharply from the current level, the pair could drop to $275. A break below this level will complete a head and shoulders pattern. The pair could then decline to $240 and later to $212.
Ripple (XRP) has been trading in a tight range between $0.33 and $0.35 for the past four days. This suggests indecision among the bulls and the bears.
If the price turns down and breaks below $0.33, the advantage could tilt in favor of the sellers. The XRP/USDT pair could then decline to the crucial level at $0.30. The bulls are likely to defend this level aggressively. A strong rebound off this level will suggest that the pair may remain range-bound between $0.30 and $0.39 for some more time.
On the other hand, if the price breaks above $0.35 and the moving averages, it will suggest that bulls are attempting to form a floor at $0.33. The pair could then rise to $0.39, which is an important level to keep an eye on. If bulls clear this hurdle, the pair could rally to $0.48.
Cardano (ADA) has been trading between $0.43 and $0.47 for the past four days. Although the bulls bought the dip to $0.43 with vigor, they have not been able to clear the overhead hurdle at $0.47.
The price action formed an inside-day candlestick pattern on Aug. 24, indicating indecision among buyers and sellers. If bulls thrust the price above $0.47, the ADA/USDT pair could rise to the moving averages. A break and close above this resistance could open the doors for a possible rally to the downtrend line.
Conversely, if the price turns down and breaks below $0.43, the pair could slide to the strong support at $0.40. This is an important level to watch out for because if it cracks, the pair could resume its downtrend.
Solana (SOL) is struggling to start a recovery as bears are posing a strong challenge near $37. The bears may now attempt to pull the price to the strong support at $32.
The bulls have successfully defended the $32 support on two previous occasions; hence, the level may again attract buyers. If the price rebounds off $32, the bulls will again try to push the SOL/USDT pair above the moving averages.
If they succeed, the pair could rally to the overhead resistance at $48. The buyers will have to propel the price above this level to signal a potential trend change.
On the contrary, if the price turns down and breaks below $32, it will suggest that bears are in control. The pair could then drop to the crucial support at $26.
Dogecoin (DOGE) slipped below the trendline on Aug. 22 but the bulls purchased the drop as seen from the long tail on the day’s candlestick. However, a negative sign is that the bulls failed to clear the overhead resistance at the 50-day SMA ($0.07).
The bears will once again attempt to sink the price below the trendline. If they succeed, the DOGE/USDT pair could decline to $0.06. If this support also cracks, the next stop could be the crucial level of $0.05.
Contrary to this assumption, if the price turns up from the current level and rises above the 20-day EMA ($0.07), it will suggest strong demand at lower levels. The pair could then rise to the overhead resistance at $0.08 and later to $0.09.
Polkadot (DOT) has been attempting to climb above the 50-day SMA ($7.81) but the bears have held their ground. The long tail on the Aug. 22 and 23 candlestick shows strong buying at lower levels.
The bulls will have to push the price above the 50-day SMA and the 20-day EMA ($8.07) to clear the path for a possible rally to $9.17 and then $10. This is an important level to keep an eye on because a break and close above it could signal that the DOT/USDT pair may have bottomed out. The pair could then rise to the overhead resistance at $12.44.
On the contrary, if the price turns down from the moving averages, it will suggest that bears are active at higher levels. The sellers will then attempt to sink the pair below $7. If they manage to do that, the pair could slide to $6.
Shiba Inu (SHIB) continues to trade near the 20-day EMA ($0.000013) for the past few days, which suggests a state of indecision among the bulls and the bears.
The flattening 20-day EMA and the RSI near the midpoint suggest that the SHIB/USDT pair could remain range-bound for the next few days. If the price sustains below the 20-day EMA, the pair could slide to $0.000012. This is an important support for the bulls to defend because a break below it could open the doors for a fall to $0.000010.
Alternatively, if the price turns up and breaks above $0.000014, the pair could start its northward journey toward $0.000018. The bulls will have to overcome this barrier to signal the start of a new uptrend.
Polygon (MATIC) has been rising along the 50-day SMA ($0.82) for the past four days as bulls are buying the dips. The bears will attempt to stall the recovery at the 20-day EMA ($0.86).
If the price turns down from the 20-day EMA, the bears will make one more attempt to sink the MATIC/USDT pair below the critical level at $0.75. If that happens, the pair could slide to the next major support at $0.63.
Alternatively, if the support at $0.75 holds, the pair will attempt to climb above the 20-day EMA and rally to the overhead resistance at $1.05. The bulls will have to overcome this barrier to indicate the resumption of the uptrend.
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.
Market data is provided by HitBTC exchange.