Several major cryptocurrencies have seen heavy buying at lower prices. This indicates that the uptrend is likely to restart once Bitcoin support is found.
Bitcoin (BTC) soared above $10,000 on May 7, and just as everyone was getting ready for the long-awaited halving surge, CoinMarketCap’s top-ranked cryptocurrency plummeted over 15% to reach a low of $8,130.58.
However, the sudden fall in stock did not draw more sales, meaning traders do not panic and dump their positions. This suggests the feeling is about continuing to buy on the falls.
If Bitcoin plummets, it drags along with it most cryptocurrencies. But it is also important to note that most big cryptocurrencies have been in an uptrend for several weeks.
Corrections in an uptrend give traders buying opportunities would they have missed jumping on the bandwagon. With the Bitcoin halving less than 2 days ago, uncertainty is likely to stay strong. Hence, traders should consider reducing their position size in the next few days to keep their risk under control.
Let’s look at which five big cryptocurrencies offer lucrative short-term trading opportunities.
Bitcoin (BTC) broke through $9,200 on May 7 and the same day reached a high of $10,058.52. The $10,000 mark, though, has proved a tough barrier to cross.
The BTC/USD pair plummeted Saturday night after a minor correction on May 8 and 9. The bulls’ inability to hold the price above the previous resistance turned support at $9,200 may have contributed to bulls selling and the bears initiating short positions.
The pair is currently traded inside an ascending channel, where the price shifts between the support line and the channel’s resistance line.
$10,000 was above the channel resistance line, and from there, the pair fell to $8,130.58, just above the channel support line. As seen from a long tail to the downside, the fast bounce off that point is a good sign.
This means the bulls didn’t panic but used the drop to buy from the channel’s support line. As long as the price stays within the channel, the trend remains up, and steep declines to the channel’s support line can be purchased.
A drop under the channel would be the first sign of weakness. If this happens, you can avoid long positions before a new buy setup emerges once again.
The 4-hour chart shows the price drop sharply within a short time frame (shown on the chart through the blue arrow). If the traders look at the 30-minute map, they will see that within 30 minutes, the pair dropped from $9,566.52 to $8,130.58. Such a fall typically implies a major player liquidation.
However, it is positive that the price has risen dramatically from $8,130.58 and has since traded above the $8,500 rate. The recovery could face strong resistance between $8,960.97 and $9,156.94, which corresponds to 50 percent and 61.8 percent Fibonacci retracement rates of this leg of the fall.
If the pair bounces off $8,500, traders with a stop-loss put just below the channel might get a good entry point. On the upside, the goal is $9,600, and then $10,000.
By comparison, if the next drop falls below $8,500, traders should wait for the price to bounce off the channel’s support line, which will provide another buying opportunity with stops set just below the mark.
If the bears sink the price below the channel, it will be an enormous negative because it will signify a potential pattern shift. And, if the pair sustains below the channel, bottom fishing should be avoided.
Though on April 29 and 30, Ether (ETH) broke above the ascending channel resistance line, the bulls struggled to maintain the higher rates. That led to a correction on May 7, which found support on the 20-day simple moving average ($204).
The 2nd-ranked cryptocurrency on CoinMarketCap today, however, turned sharply down and plummeted below both the ascending channel’s moving averages and support thread.
Because of this, the exponential moving average of 10 days ($203) turned slightly down, and the relative strength index fell into the negative region. This means the bears are trying to make a comeback. The price should be kept below the channel to confirm a trend shift.
The price has now bounced off the ascending channel support line, which is a good sign. That indicates the bulls see the dips as an opportunity to buy. A break above the downtrend line is likely to pick up momentum by the pair.
The ETH/USD pair is trying to invert direction from the ascending channel support thread. However, the bears protect the Fibonacci retracement point of 38.2 percent of the current leg of the fall, which is at $193,946.
If the price falls below $181.40, it will show weakness and may lead to a $167 decline and a $150 decline below it. Traders can then start short positions under $181, with stops set just above $194.
Conversely, if the price emerges from the channel’s support line, it will signal to purchase on dips. Therefore, with the stops set at $181, the bulls will buy the bounce off the channel. If the bulls drive the price above the resistance of $197.821-$201.696, a downtrend line rally could be likely.
As the markets are unpredictable, traders will keep their stops trailing higher to reduce their risk.
Tezos (XTZ) traded within an upward axis, indicating the trend is up. For the past few days, however, the bears have been vigorously defending the $3 rate. Though on April 29 and 30, the bulls broke above this point, they could not build up on the breakout.
On May 9, CoinMarketCap’s 10th-ranked crypto turned from just below $3 rates. Today’s selling accelerated as the price slipped below $2.55, strong support.
Though the bears broke below the channel’s support line, they could not hold the price below the mark. The long tail on the candlestick suggests the bulls are vigorously protecting the channel’s support line.
The 10-day EMA ($2.72) turned flat, and the RSI dropped just above the midpoint, indicating a compromise between the bulls and the bears. If the bulls can keep the price above $2.55, there could be a buying opportunity for them.
The XTZ/USD pair is likely to face resistance in the $2.6015-$2.0686 range, which corresponds to the 50 percent and 61.8 percent retracement Fibonacci rates of the current fall leg.
If the price falls from this resistance point, it is possible to fall to $2.50, and below it to the channel support line. The bulls are likely to defend the zone fiercely. If the price bounces off the zone, it might give the traders a chance to buy.
The stops can be kept just under $2.20 for that trade. On the upside, it’s possible to surge to $2.70 and then to $3. As the price moves up, traders will trail the stops higher.
This bullish view would be invalidated if the next fall falls below the channel support line and remains below $2.240. If that level breaks, you should avoid long positions before a new buy setup emerges.
Cardano (ADA) faced stiff resistance at the $0.0522712 overhead resistance, while the bulls bought the dips at $0.0468137 to the support. This close trading range indicates a compromise between buyers and sellers.
CoinMarketCap’s 13th-ranked cryptocurrency plummeted to today’s low of $0.0427299, but the fast rebound from the lows indicates strong buying by the bulls. If the bulls can hold the price above $0.0468137, they may provide a buying opportunity.
Conversely, if the price falls to $0.0468137 again, it will show weakness. Below that point, a $0.0427299 retest can be made. If the support breaks, too, there will be a deeper correction on the cards.
The four hour ADA/USD pair reveals the price is trapped in a range of $0.0543484-$0.0461143. Though the price dropped below that amount, the bulls were unable to maintain the lower rates. This resulted in a fast pullback, showing heavy buying on the dips.
However, the recovery faces resistance in the $0.0477515-$0.0489368 range, which corresponds to the retracement Fibonacci rates of 50 percent and 61.8 percent from the most recent fall.
If the bulls buy the next fall to the support zone of $0.0468137-$0.0461143, it will suggest lower-level demand. Hence, traders can purchase the bounce off this zone with a target of $0.053.
If the bears fall and hold the price below $0.0461143, the bullish view will be invalidated. If that happens, it’s likely a deeper fall will happen, so traders can avoid bottom fishing below that point before a new buy setup emerges.
For the last few weeks, NEO has been trading inside the ascending range. While the bulls broke beyond the channel’s line of resistance on May 8, they could not maintain the breakout.
As a result, CoinMarketCap’s 20th-ranked cryptocurrency dipped back into the channel again. However, the advantage is with the bulls, with both the moving averages sloping up and the positive area’s RSI.
Today, the bulls bought the dip to the 10-day EMA ($9.8), which is a good sign. This shows that the bulls don’t wait to get into long positions for a deeper fall. So long as the price stays within the window, the trend will remain positive.
The first indication of weakness is if the bears sink the price into the channel’s lower half. A split below the channel support line will signify a trend-shift.
The 4-hour chart shows that the bulls’ inability to hold the price above the channel’s resistance line prompted profit-booking. That dragged the price down to just under the channel’s centerline.
However, strong buying near $9.64 rates has moved the NEO/USD pair back into the top half of the channel. This represents an optimistic sign. If the bulls can raise the price to $10.50, then it is possible to rally to the channel’s resistance line at $11.30, and traders can buy at $10.50 with a stop-loss below $9.60.
On the other side, if the pair drops under $9,63378, a drop to the channel’s support line is likely. This level of bounce can also deliver a low-risk buying opportunity.
In this situation, the stop-loss should be held only below the channel as a deeper correction is likely if the price stays below the channel.