Bitcoin and select altcoins are witnessing profit-booking at higher levels, a signal that a short phase of consolidation could occur over the next few days.
Bitcoin’s (BTC) market capitalization topped $889 billion on Feb. 9, pushing BTC above the value of Tesla and the Russian ruble, according to data from AssetDash.
The current rally is longer limited to Bitcoin as several altcoins have been surging in the past few days. This shows the buying interest is broad-based and today the total crypto market cap surpassed $1.4 trillion.
While the positive news flow and price rise in most cryptocurrencies may give the impression that the bull run will never stop, traders should be careful because every bull phase witnesses periodic corrections.
Another important thing to note is that every bull phase usually has a different set of leaders. The altcoins that have performed exceedingly well in the current bull run may not lead the next one. Therefore, traders should study their portfolio and close the positions that may not be fundamentally strong but could have risen only due to positive sentiment.
It is difficult to time the top because it is only in hindsight that one can say with conviction that a top has been made. Therefore, traders may consider keeping appropriate stop-losses on their positions to protect their paper profits.
Let’s study the charts of the top-10 cryptocurrencies to determine the strength in the trend and the critical levels to watch out for.
After the sharp rally on Feb. 8, Bitcoin formed a Doji candlestick pattern on Feb. 9, which suggests the bulls and the bears were undecided about the next move. The indecision has resolved to the downside today, indicating profit-booking by traders.
The BTC/USD pair may now drop to the breakout level at $41,959.63. If the price rebounds off this support, it will suggest that the sentiment remains bullish and traders are not waiting for a deeper correction to buy.
If the bulls can push the price above $48,152.84, the uptrend may resume, with the next target objective at $60,974.43.
Contrary to this assumption, if the pair breaks and sustains below $41,959.63, it will suggest that traders are booking profits aggressively.
A break below the moving averages will be the first sign that supply exceeds demand. The bears will gain an upper hand if the pair drops below $28,850.
Ether (ETH) made a new all-time high today, but the long wick on the candlestick suggests that traders are booking profits at higher levels. The failure of the biggest altcoin to pick up momentum after breaking above $1,757.338 indicates that demand dries up at higher levels.
The ETH/USD pair may witness a minor correction or consolidation that could pull the price down to the 20-day exponential moving average ($1,514). This is an important support to watch out for because the bulls have not allowed the price to sustain below it for the past several weeks.
If the price rebounds off the 20-day EMA, it will suggest that traders continue to view the dips to this level as a buying opportunity. The bulls will then try to resume the uptrend and push the price to $2,000.
This positive view will invalidate if the bears sink and sustain the price below the 20-day EMA for more than two days. Such a move will signal that traders are booking profits aggressively and that could pull the price down to the 50-day simple moving average ($1,194).
Cardano (ADA) is witnessing a vertical rally that pushed the price to $0.8871889 today. This strong up-move of the past few days has pushed the relative strength index (RSI) deep into overbought territory.
Vertical rallies are rarely sustainable and if the uptrend stalls, several momentum traders may rush to the exit, resulting in a sharp drop.
The first support on the downside is the 38.2% Fibonacci retracement level at $0.6646150 and then the 50% retracement level at $0.5958618.
If the price rebounds off either support, it will suggest that bulls continue to look for buying opportunities on dips. They will then try to resume the uptrend and drive the price to the psychological level at $1.
On the contrary, if the bears sink the price below $0.5958618, the correction could deepen to the 20-day EMA ($0.51).
XRP has been a laggard during the current crypto bull run but the bulls are trying to make amends. The buyers are currently trying to push and sustain the price above $0.50. If they manage to do that, a new uptrend is likely.
The rising 20-day EMA ($0.39) and the RSI just below the overbought level suggests that bulls have the upper hand. The first target objective on the upside is $0.65 and if this level is scaled, the uptrend may reach $0.75.
Contrary to this assumption, if the bulls fail to sustain the price above $0.50, it will indicate that traders continue to lighten up their positions on rallies. Such a move could keep the price range-bound between $0.3855 and $0.50 for a few days.
Polkadot (DOT) remains in an uptrend but the momentum is weakening. The altcoin formed a Doji candlestick pattern on Feb. 9 and has again made one today, which suggests indecision among the bulls and the bears.
If the uncertainty resolves to the downside and the price sustains below $22, the DOT/USD pair could drop to the $19.40 support. This is an important level to keep an eye on because a break below it could pull the price down to $14.7259.
On the other hand, if the price turns up from the current level or $19.40, it will suggest traders continue to buy the dips. If the bulls can resume the uptrend, the pair could rally to $30.
Binance Coin (BNB) is in a strong uptrend. The vertical rally of the past few days has pushed the RSI above 91, which suggests the markets are overheated in the short-term. Such gravity-defying rallies are rarely sustainable and a correction could be around the corner.
The long wick on today’s candlestick suggests traders are booking profits after the recent up-move. The first support on the downside is 38.2% Fibonacci retracement level at $105.7886 and then the 50% retracement at $92.6259.
If the price rebounds off either support, it will suggest that traders continue to buy on dips. The buyers will then try to resume the uptrend. On the other hand, if the price breaks below $92.6259, the BNB/USD pair could drop to the 61.8% retracement level at $79.4632.
Litecoin (LTC) broke above the $185.5821 overhead resistance today but the bulls are finding it difficult to sustain the breakout. This suggests the bears are selling at higher levels and are attempting to trap the aggressive bulls.
If the LTC/USD pair fails to sustain above $185.5821, the short-term traders may book profits and that could sink the price to the moving averages.
If the price bounces off the moving averages, the bulls will again try to propel and sustain the price above $185.5821. If they succeed, the pair may rally to $200 and then to $250.
Conversely, if the bears sink the price below the moving averages, a drop to $120 is possible. A rebound off this level could keep the pair range-bound for a few days. A break below this support could tilt the advantage in favor of the bears.
Chainlink (LINK) rose to a new all-time high on Feb. 9 and the up-move extended today, but the bulls are not able to sustain the momentum. This could have resulted in a few short-term traders booking profits.
However, the long tail on today’s candlestick shows the bulls have not given up and are buying on dips.
If the price rises from the current levels and breaks above $28.6412, the LINK/USD pair may rally to $30 and then $33.
On the contrary, if the bears sink the price below the 20-day EMA ($23.85), the pair could drop to $20.1111.
Dogecoin’s (DOGE) volatility has been reducing and that has resulted in successive inside day candlestick patterns in the past three days. This suggests the bulls and the bears are not taking large directional bets.
If the uncertainty resolves to the upside and the bulls push the price above the $0.0875 overhead resistance, the uptrend could resume, with the next target objective at $0.102412 and then $0.13.
Contrary to this assumption, if the price slips below $0.0625, the DOGE/USD pair could start a deeper correction that may reach the 20-day EMA ($0.44).
Bitcoin Cash (BCH) turned down from the overhead resistance today and has formed a bearish engulfing candlestick pattern. The bears will now try to sink the altcoin to the moving averages.
A strong rebound off the moving averages will suggest the bulls are buying on dips. They will then try to once again push and sustain the price above $539. If they succeed, a rally to $631.71 is possible.
On the contrary, if the bears sink the price below the moving averages, the BCH/USD pair may drop to $370. A strong bounce off this critical support may keep the pair range-bound between $539 and $370 for a few days.
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.