US stock markets rallied strongly last week, ending a three-week losing streak. The S&P 500 rose 3.65% last week while the Nasdaq Composite climbed 4.14%. Continuing its close correlation with US equity markets, Bitcoin (BTC) has also made a strong comeback and is trying to end the week with gains of over 7%.
The strong rally in equity and cryptocurrency markets is showing signs of a bottom formation, but it may be too early to predict the start of a new upside move. Stock markets could remain on edge ahead of the release of US inflation data on September 13 and the Federal Reserve meeting on September 20-21.
In addition to taking inspiration from stock markets, the cryptocurrency space has its own important events to look forward to. The Ethereum merger and Vasil hard fork of Cardano (ADA) expected in the coming days could increase the volatility of several cryptocurrencies.
Although choppy markets increase risk, they can provide short-term trading opportunities for agile traders. Let’s study the charts of five cryptocurrencies that look attractive in the short term.
Bitcoin surged above the 20-day exponential moving average ($20,662) on September 9, which was the first indication that selling pressure might be easing. The bears are trying to block the rally at the 50-day simple moving average ($21,946), but a positive sign is that the bulls haven’t given much ground.
The 20-day EMA has started to rise gradually and the Relative Strength Index (RSI) is in positive territory indicating that the path of least resistance is to the upside. If the bulls propel the price above the 50-day SMA, the BTC/USDT pair could rally towards the strong overhead resistance at $25,211. Bears are expected to defend this level with vigor.
Another possibility is that the price is falling from the 50-day SMA. If this happens, the pair may fall to the 20-day EMA. This is an important level to watch as a break and a close below it could open the doors down to $18,626. Alternatively, if the price bounces off the 20-day EMA, it will increase the likelihood of a break above the 50-day SMA.
The pair gained momentum after breaking above the $19,520 breakdown level. The strong rally pushed the RSI into overbought territory, suggesting a consolidation or minor correction. The buyers face a tough challenge near $22,000, but they haven’t given way to the bears. This suggests that every minor dip is bought.
If the bulls propel the price above $22,000, the pair could quickly rally towards $23,500 where the bears could once again attempt to block the upside.
Contrary to this assumption, if the price declines and breaks below the 20-EMA, the pair could fall to $20,576. A break below this level will suggest that the pair could consolidate in a wide range between $22,000 and $18,626 for some time.
Cosmos (ATOM) broke above the overhead resistance of $13.45 on September 8, indicating demand at higher levels. The next steep resistance is at $20.30, which gives room for a rally.
However, before that, the bears will attempt to pull the price below the breakout level of $13.45. This is an important level to watch as a breakout and a close below will indicate that the recent breakout may have been a bullish trap.
On the other hand, if the price rises from the current level or rebounds from $13.45, it will suggest that the bulls are controlling and buying on every dip. If the bulls push the price above $17.20, the upside could accelerate to $20.30.
The 4-hour chart shows that the ATOM/USDT pair surged after breaking above the broad resistance at $13.45. This pushed the RSI deep into overbought territory and started a correction, but a positive sign is that the bulls haven’t given much ground.
If the price rebounds from the current level, the possibility of a break above $17.20 increases. If that happens, the upside may continue and the pair may rally back towards $20.30.
This positive view could be invalidated in the short term if the price continues to decline and drops below the 20-EMA. If that happens, the pair could drop to the 50% Fibonacci retracement level of $14.36.
ApeCoin (APE) rallied strongly off the support at $4.17, indicating aggressive buying at lower levels. This suggests that the corrective phase may be winding down, making it an attractive short-term candidate.
Buyers pushed the price above the 20-day EMA ($5) on September 9 and the APE/USDT pair formed a Doji candlestick inside the day on September 10. This uncertainty was resolved on the upside on September 11 with a strong recovery. at the 50-day SMA ($5.85). The bears might try to block the rally at this level.
If the price declines from the current level but bounces off the 20-day EMA, this will suggest that sentiment has turned positive and traders are buying lower. The bulls will then again attempt to push the price above the 50-day SMA. If they do, the pair could surge towards overhead resistance at $7.80.
This positive view could be invalidated in the short term if the price declines and falls below the 20-day EMA. In this case, the pair may fall to $4.17.
The 20-EMA on the 4-hour chart started to rally and the RSI rose into the overbought territory. This indicates that the bulls have the upper hand but a short-term pullback is possible.
If the price declines from the current level but rebounds from $5.30, this will suggest strong demand at lower levels. The bulls will then make another attempt to push the price above $5.83 and extend the rally to $6.44.
Alternatively, if the price declines and falls below the 20-EMA, the advantage may tip in favor of the bears.
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Chiliz (CHZ) broke above the 20-day EMA ($0.20) on September 9, which was the first indication that the corrective phase might end. Therefore, this token has been added to the list.
The bears attempted to pull the price back below the 20-day EMA on September 10, but the bulls held firm. The buyers are trying to push the price towards the overhead resistance at $0.26, but the upside may face strong headwinds near $0.23.
If the price declines but does not break below the 20-day EMA, it will increase the likelihood of a rally to $0.26. Contrary to this assumption, if the price declines and breaks below $0.20, it will suggest that the bears are active at higher levels. This might pull the price towards the 50-day SMA ($0.18).
The 4-hour chart shows the bears defending the downtrend line. If the price drops from the current level but bounces off the moving averages, it will suggest that the bulls are trying to come back.
The buyers will then again attempt to push the price above the downtrend line. If successful, the pair may begin its march north towards $0.23 and later towards $0.26.
Alternatively, if the price drops below $0.20, it will suggest that the pair may remain inside the falling wedge pattern. This could bring the price down to $0.18.
Quant (QNT) failed to break below strong support at $87.60, indicating that sentiment is positive and bulls are buying lower. This is the reason for his selection.
The strong rebound from $87.60 broke above the 20-day EMA ($100) on September 8, which was the first indication that the corrective phase may be ending. The bears posed a strong challenge near the 50-day SMA ($105) but were unable to push the price down below the 20-day EMA.
This indicated that sentiment had turned positive and bulls were buying on the dips. The buyers pushed the QNT/USDT pair above the 50-day SMA on September 11. If the bulls hold the higher levels, the pair could hit $117 and then $124. A break above this level could open the doors for a rally to $130.
This bullish view could be invalidated if the price declines and falls below the 20-day EMA. If that happens, the pair could drop to strong support at $87.60.
The 4-hour chart shows that the pair has rebounded strongly off the support at $87.60. The bears posed a big challenge near $108, but a positive sign is that the bulls bought the decline from the 20-EMA. This indicates that traders view dips as a buying opportunity.
The buyers took over the rally pushing the price above the overhead resistance at $108. The pair could climb to $113 and later to $117. Conversely, if the price declines and falls below the 20-EMA, the pair could drop to the 50-SMA.
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.