Cryptocurrency markets and U.S. stocks took profits this week as macroeconomic data hinted that the Fed would continue to raise interest rates. Bitcoin (BTC) fell more than 4% and the S&P 500 fell 2.7%, its worst week of the year.
The CME FedWatch tool shows a 73% chance of a 25bp rate hike by the Fed at its March meeting, but the likelihood of a 50bp hike is starting to slow after higher-than-expected inflation data within two weeks gaining traction.
In uncertain times, some tokens enter deeper corrections, while others buck the trend and continue to outperform. Therefore, it becomes important to choose the right token for trading.
This list lists some tokens that have experienced a shallow correction or a sharp rebound from the support level. Let's take a look at their chart and determine the level to pay attention to.
Bitcoin/USDT
Bitcoin fell below the 20-day exponential moving average ($23,391) on February 24, but bears were unable to take advantage of this and keep the price below the strong support at $22,800.
Price bounced off $22,800 on February 25 and bulls are trying to push price above the 20-day EMA. If they manage to do this, it indicates that the BTC/USDT currency pair may consolidate between $25,250 and $22,800 in a matter of days.
The flattening 20-day moving average and the Relative Strength Index (RSI) near the midpoint also indicate range-bound volatility in the near term.
Alternatively, if the price falls below $22,700, selling may intensify and the pair may plummet to the next strong support at $21,480.
The 20-EMA on the 4-hour chart has descended and the RSI is in negative territory. This indicates that the bears have an advantage. Sellers will work hard to protect the 20-EMA, and if the price falls from this level, the probability of a fall below $22,800 increases. If this happens, the sell-off could intensify and the pair could slip towards $21,480.
Conversely, if the price breaks the 20-EMA, it indicates that the bulls are buying the dip. This could push the pair towards the 50 simple moving average and keep the price in the range longer.
Low dropout pressure/USDT
The fact that the Lido DAO (LDO) did not stay below the 20-day moving average ($2.75) during the recent correction is a positive sign. Another bullish sign is the formation of pennants near local highs.
The bulls will try to push the price above the resistance line of the pennant. If they succeed, the LDO/USDT pair may start the next upward movement. The pair may first rise towards $3.90 and then try to bounce back to $4.24.
Conversely, if the price falls from the resistance line, it indicates that the bears are selling on the high. This can keep the price inside the pennant longer. If the bears want to signal a short-term trend reversal, they will have to drop the price below the pennant.
A strong rally on the pennant support line indicates buying on the dip. Buyers must overcome obstacles at the resistance line to regain control. If they do, the pair may resume its uptrend.
However, the bears may have other plans as they will try to protect the resistance line. If the price drops from this level, the equilibrium state may last for some time.
Falling below the pennant may entice short-term traders to take profits. This may pull the price to $2.20 and then to $2.
EGLD/USDT
MultiversX (EGLD) fell from the resistance line, but an encouraging sign is that bulls are trying to defend the 20-day EMA ($47).
Both MAs are sloping upwards with the RSI above 54, indicating a slight advantage for buyers. The bulls will try to push the price towards the resistance line, where they may again face strong opposition from the bears.
If the price falls and plummets below the 20-day EMA, this bullish view may lapse in the short term. This will indicate that the bears are selling on each small rally. The EGLD/USDT currency pair may then fall to the 50-day EMA ($44) and then to $40.
The four-hour chart shows price falling within the descending channel pattern. Buyers buy at lower levels and push price towards the resistance line of the channel. If this resistance fails, the pair may rise towards the 50-SMA and then try to retest the $54 strong mark.
Conversely, if the price pulls back from the resistance line, it indicates that the bears have not given up. This can lead to a fall towards the support line of the channel.
Related: How does the US Dollar Index (DXY) affect cryptocurrencies? Observe the macro market
TEDA/USDT
The bulls are trying to block the pullback of Theta Network (THETA) at the 20-day MA ($1.15). Both moving averages are sloping upwards and the RSI is in positive territory, indicating that the bulls have an advantage.
If buyers push price above the descending trend line, the THETA/USDT currency pair may climb to the upper resistance at $1.34. This is a strong resistance level that could open the door to a possible surge to $1.70.
Conversely, if price turns lower and falls below the 20-day EMA, it indicates that short-term bulls may be making a hasty exit. This may start a deeper correction of the 50-day MA ($1.05), followed by the $1 psychological support level.
The four-hour chart shows the formation of a symmetrical triangle pattern. Both moving averages flattened out, and the RSI oscillated near the center, indicating a balance between supply and demand.
A break below the triangle could skew the short-term advantage in favor of the bears. The pair may fall first to $1.12 and then to $1.
If the bulls want to stop the fall, they will have to quickly push the price above the triangle. This may start rising towards $1.27 and then to $1.30.
Clay/USDT
Klaytn (KLAY) is trying to break through the bottom pattern. On February 25, the price rebounded from the 20-day moving average ($0.26), indicating strong dip buying.
Bulls will try to break above the resistance at $0.34. If they do, the KLAY/USDT pair may gain momentum and soar to the psychological resistance level of $0.50. Such a move would signal a potential trend change.
If the price falls from $0.34, it indicates that the bears are vigorously protecting the level. This may pull the price down again to the 20-day EMA. A break below this level may indicate that the pair is likely to spend more time in the underlying pattern.
The bulls stopped the pullback near the 61.8% Fibonacci retracement at $0.26 and started the rally. There is a small resistance at $0.32, but if the level is broken, the pair may try to bounce back to $0.34 and then to $0.37.
On the other hand, if the price falls from the upper resistance level, it indicates that the bears are selling on the high. This could strengthen the prospect of a break below $0.26. If this happens, the pair may slip towards $0.22.