The United States looks set to avoid a catastrophic debt default after the White House and White House Republicans agreed on a tentative deal on May 27. US stock markets rose in anticipation of the deal on May 26, and the positive sentiment has spilled over into the cryptocurrency sector, which is trying to recover.
Buying is not limited to Bitcoin (BTC) alone, as select altcoins are also showing signs of a near-term uptick. But sustaining the rally at higher levels could prove difficult for the bulls.
After the deal on the debt ceiling, traders are likely to focus their attention on the Federal Reserve’s interest rate hikes. The warm personal consumption data on May 26 increased the likelihood of a rate hike at the Fed’s June meeting. The probability of a 25 basis point rate hike has risen from 17% in the week back to 64% on May 28, according to the CME FedWatch Tool.
Along with Bitcoin, which altcoins look ripe for a short-term rally? Let’s study the charts of these top five cryptocurrencies to find the important levels to watch out for.
Bitcoin price analysis
Bitcoin has reached the overhead resistance zone between the 20-day exponential moving average ($27,146) and the support line of the symmetrical triangle. This zone is likely to witness a solid battle between the bulls and the bears.
If the price goes down from the overhead zone, the bears will make another attempt to pull the price to the central support of $25,250. The bulls are expected to defend the zone between $25,250 and $24,000 with all their might, because a break below it could intensify selling. The BTC/USDT pair could then fall to $20,000.
On the contrary, if buyers overcome the overhead obstacle and push the price back into the triangle, it will suggest strong buying on dips. It increases the possibility of a break above the resistance line of the triangle. The pair could then rise to $31,000.
The 4-hour chart shows that the pair is trading within a descending channel pattern and the bears are trying to defend the resistance line. If the price declines from today’s level, but retraces from the 20-EMA, it will indicate that a dip is being bought.
The bulls will then again try to push the price above the channel. If successful, the pair could start an up move to $28,400.
In contrast, a break below the moving averages would indicate that the pair could extend its stay inside the channel for some more time.
XRP Price Analysis
XRP (XRP) has formed an inverse head and shoulders pattern, which will complete on a break and close above the neck.
The 20-day EMA ($0.45) is gradually sloping upwards and the RSI has jumped into positive territory, indicating that the path of least resistance is to the upside. If bulls drive and sustain the price above the neck, the XRP/USDT pair could start a rally to the overhead resistance zone between $0.54 and $0.58. The pattern target for the bullish setup is $0.55.
This positive view will be nullified in the short term if the price breaks down from the neck and plunges below the 20-day EMA. The pair could then go down to the important support near $0.40.
The 4-hour chart shows that the pair is witnessing a tough battle between the bulls and the bears near the neck. The rising 20-EMA and RSI in the positive zone indicate a minor advantage for the buyers.
If the price retraces from the 20-EMA, it will increase the likelihood of a break above $0.48. If that happens, the couple is likely to start up. Alternatively, if the price turns down and breaks below the moving averages, it will tip the short-term advantage in favor of the bears. The pair could then fall to $0.44.
Decision price analysis
Bulls pushed Arbitrum (ARB) back above the 20-day EMA ($1.17) on May 28, indicating the start of a potential recovery.
The bears are likely to pose a strong challenge at $1.20, but if bulls pierce this level, the ARB/USDT pair could gain momentum. There is a minor resistance at the 50-day simple moving average ($1.29), but it is likely to be crossed. The pair could then climb to $1.36 and later to $1.50.
If bulls want to prevent the rally, they need to quickly pull the price back below the 20-day EMA. If they manage to do so, the pair could slide to $1.06 and then to $1.01. This is an important zone for the bulls to defend because if it cracks, the pair could witness a sharp drop to $0.73.
The 4-hour chart shows that the bulls have pushed the price above the resistance line of the symmetrical triangle pattern. The bears are trying to stop the $1.20 move, but if the bulls do not allow the price to re-enter the triangle, it will increase the prospect of an upside breakout. The pattern target for the setup is $1.43.
Conversely, if the price goes down and breaks back into the triangle, it would indicate that the recent breakout may have been a bull trap. The bears will then try to lower the price back towards the triangle support line.
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EOS Token Price Analysis
Eos (EOS) has fluctuated between $0.78 and $1.34 in recent months. Generally, in such a large range, traders buy near support and sell near resistance.
The EOS/USDT pair bounced off $0.81 on May 25 and rose above the 20-day EMA ($0.89) on May 28. This is the first indication that the range remains intact. The bulls will try to push the price to the 50-day SMA ($1) where the bears will likely mount a strong defense.
If the next dive finds support at the 20-day EMA, it will indicate that the bulls are at the top. The pair could then rise to $1.11. The bears need to pull the price below the vital support at $0.78 to indicate the start of a downtrend.
The recovery attempt faces selling near overhead resistance at $0.93, but the bulls haven’t given up much ground. The moving averages have completed a bullish crossover and the RSI is near the overbought zone, indicating that bulls have the upper hand.
If buyers drive the price above $0.93, the pair could gain momentum and rise towards the psychological level of $1 and then to $1.11. This bullish view could be invalidated in the short term if the price goes down and breaks below the moving averages.
Aave price analysis
Aave (AAVE) has fallen within a descending channel pattern, which generally behaves like a bullish setup.
After struggling near the 20-day EMA ($65.50) in recent days, the bulls pushed the price above the May 27 resistance. This suggests the start of a possible relief rally.
The AAVE/USDT pair may first rise to the 50-day SMA ($70) and then attempt a rally to the resistance line. A break and close above this level could start a short-term rally.
Contrary to this assumption, if the price breaks down from the current level and breaks below the 20-day EMA, it would indicate that demand is drying up at higher levels. The next support on the downside is at $62.
The 4-hour chart shows the formation of an ascending triangle pattern that will complete on a break and close above $67.40. The pair can then initiate an up move towards the $74 pattern target.
Instead, if the price breaks down from today’s level, it will indicate that bears are protecting the $67.4 level hard. If the price slips below the moving averages, it would suggest that the pair may remain inside the triangle for a while longer. A break below the triangle will invalidate the positive setup, tipping the advantage in favor of the bears.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.