The stock market continues to trend upwards while crypto investors await the Federal Reserve’s announcement this week before choosing the direction of BTC and altcoin prices.
U.S. stocks are trying to extend their recovery at the start of a new week. One reason that could boost investor confidence is that the benchmark 10-year Treasury yield fell further to 3.924%.
However, the bullish sentiment in the stock market has not affected the cryptocurrency market, which continues to underperform.
The tight range trading since March 4 suggests uncertainty about the next directional move.
Generally, periods of low volatility are followed by a return of volatility. Federal Reserve Chairman Jerome Powell’s congressional testimony on March 7 and March 8 will focus on the outlook for inflation and rate hikes. Then, on March 10, the release of the February jobs report could heighten volatility.
Can strength in U.S. stocks and weakness in the U.S. Dollar Index (DXY) attract buying into the battered crypto space? Let’s study the charts to find out.
SPX
The S&P 500 Index (SPX) has risen sharply from 3,928 on March 2, indicating that buyers have not given up and are accumulating at lower levels.
Buyers pushed the price above the 20-day exponential moving average (4,030) on March 3 and later moved higher again on March 6. A move back above the uptrend line could trap aggressive bears who might be eager to exit. The index will attempt to move to 4,200 and then to 4,300.
Conversely, if the price turns down from the current levels or from the overhead resistance and breaks below the moving averages, it will suggest that the bears are back. A breakout and close below 3,928 could open the doors for a drop to 3,764.
DXY
The recovery in the US Dollar Index (DXY) is facing selling near the 38.2% Fibonacci retracement level of 105.52, but a small positive factor in favor of buyers is that they are not allowing the price to fall below the 20-day EMA (104.10) .
If the price rebounds off the 20-day EMA, the bulls will once again try to push the index above the overhead resistance. If successful, the index could rally to the 50% retracement level of 106.98 and above it to the 61.8% retracement level of 108.43.
Conversely, if the price turns down and breaks below the 20-day moving average, the next stop could be the 50-day moving average (103.36). Such a move would suggest that the index could consolidate between 101.29 and 105.52 for a while.
Bitcoin/USDT
Bitcoin is struggling to recover above $22,800, which suggests that bears are trying to turn this level into resistance. The moving averages are about to complete a bearish crossover and the relative strength index (RSI) is in the negative territory, which suggests that bears have the upper hand.
If the price turns down from the current levels, the BTC/USDT pair could drop to the critical support of $21,480. This level is likely to witness a tough battle between the bulls and bears. If the bears win, the pair could extend its decline to the important psychological level of $20,000.
On the other hand, if the price rebounds off $21,480, the bulls will again try to clear the overhead barrier at $22,800. If they manage to do that, the pair could start a move higher towards $25,250.
Ethereum/USDT
It has been fluctuating in a narrow range since the sharp drop on March 3, indicating indecision among buyers and sellers.
If the bears sink the price below $1,544, the advantage is likely to tilt in their favor and the ETH/USDT pair might drop to the strong support of $1,461. This level is likely to act as a strong support again. If the price rebounds off this level, the pair might stay between $1,461 and $1,743 for a longer period.
On the upside, the bulls will have to push and sustain the price above the moving averages to signal a comeback. The pair might then try to climb above the $1,680–$1,743 resistance area. If that happens, the pair could start moving towards $2,000.
BNB/USDT
A minor pullback from the current levels suggests a lack of aggressive buying by the bulls. The downsloping 20-day EMA ($301) and the RSI in the negative territory suggest that the path of least resistance is to the downside.
If the bears sink the price below $280, the BNB/USDT pair will complete a bearish head and shoulders (H&S) pattern. This could start a downward move towards the first target objective of $245 and then $222.
If the bulls want to arrest the decline, they will have to strongly defend the $280 support and quickly push the price above the 20-day EMA. This could increase the possibility of a move to the overhead resistance at $318.
XRP/USDT
It rebounded from the $0.36 support on March 3 but was sold off strongly near the 20-day EMA ($0.38). This shows negative sentiment and traders are selling on rallies.
If the price breaks below $0.36, the XRP/USDT pair could touch the support line of the descending channel pattern. Buyers are likely to buy on dips to keep the pair inside the channel but might find it difficult to overcome the $0.36 barrier.
The first sign of strength will be a breakout and close above the resistance line of the channel. This is likely to attract more buying and the pair may try to rally to $0.43 where they are likely to face stiff resistance from the bears.
ADA/USDT
There was a rebound from the $0.32 support on March 3 but the bulls could not push the price above the overhead resistance at $0.34. This suggests selling on rallies.
The bears will once again try to sink the price below the $0.32 support. If they succeed, the ADA/USDT pair could see an aggressive sell-off. There is no major support until the pair reaches $0.26.
This negative view might be invalidated in the near term if the price rebounds from $0.32 and breaks out of the moving averages. This could increase the possibility of the formation of the right shoulder of the inverse H&S pattern.
Bitcoin/USDT
An inside day candlestick pattern was formed on March 5, which shows indecision between the bulls and the bears.
The downsloping 20-day EMA ($1.23) and the RSI below 41 suggest favor for the bears. The MATIC/USDT pair could drop to the solid support of $1.05. Buyers are expected to defend this level aggressively as a breakdown and close below it could sink the pair to $0.90 and then to $0.69.
Alternatively, if the price turns up from the current levels or rebounds strongly from $1.05, it will suggest demand at lower levels. This could start a rally to the 20-day EMA, where the bears are likely to mount a strong defense again.
Dogecoin/USDT
Dogecoin attempted to recover on March 5, but the long wick on the day’s candlestick suggested selling on rallies.
The downsloping 20-day EMA ($0.08) and the RSI near the oversold zone suggest that bears are in command. The sellers will try to further consolidate their positions by dragging the price below the critical support near $0.07. If it breaks below this level, the pair could reach the pattern target of $0.06.
On the way up, the first resistance level to watch out for is $0.08. If this level is scaled, the DOGE/USDT pair could start a rally towards $0.10.
SOL/USDT
Bulls attempt to initiate recovery in Solana
on March 5, but the long wick on the day’s candlestick indicated selling near the 20-day EMA ($22.32).
The bears will try to sink the price below the strong support near $19.68. If they succeed, the selling is likely to intensify and the SOL/USDT pair may plummet to the strong support near $15.
Conversely, if the price rebounds off $19.68, it will indicate accumulation on dips. The bulls will then again try to push the price above the moving averages. If that happens, the pair is likely to move up to the resistance line.
The area between the resistance line and $27.12 remains a critical zone to watch out for as a breakout above it could carry the pair towards $39.
C3 Tip: The views, thoughts and opinions expressed here are the author's own and do not constitute investment advice or recommendations. Every investment and transaction involves risk.
