The rise of the US dollar has slowed the recovery of the Bitcoin price, but the lower levels are likely to attract buyers of BTC and altcoins such as DOGE.
The US Dollar Index (DXY) has started a strong recovery and its rise is putting pressure on Bitcoin (BTC) and the S&P 500 Index (SPX). Market participants will be watching for any thoughts on future rate hikes when Federal Reserve Chairman Jerome Powell says speaks before the Economic Club of Washington on February 7.
Meanwhile, Bitcoin’s 43% bounce in January has improved confidence among retail investors. Crypto analytics firm Santiment said the number of Bitcoin addresses containing 0.1 Bitcoin or less shot up by 620,000 to hit 39.8 million, the highest level since Nov. 19.
With sentiment turning positive, traders generally buy dips as they anticipate the uptrend to continue. However, some analysts believe that the dip buyers will be trapped and Bitcoin may drop to the $19,000 to $21,000 support zone or worse, witness a capitulation in the coming weeks.
Could the S&P 500 and cryptocurrency markets see some short-term profit booking? What are the critical support levels to consider? Let’s study the graphs to find out.
SPX
The S&P 500 Index broke above the 4101 resistance on February 1, but the bears are unlikely to go down without a fight. They will try to push the price back above 4,101 and catch the aggressive bulls.
The onus is on the bulls to try to protect the zone between 4101 and the 20-day exponential moving average (4033). If the price bounces off this zone, the probability of a break above 4,200 increases. That could clear the way for a possible rally to 4,300 where the bears can erect a strong barrier again.
On the downside, the 20 day EMA is the crucial support to watch out for. A breakout and close below will suggest that the bulls may be losing control, putting the index in danger of falling to the uptrend line.
DXY
The US dollar index made a strong recovery on February 2, indicating aggressive buying at lower levels. The buyers maintained their momentum and pushed the price above the 20-day EMA (102) on February 3.
The index could rally to the resistance line of the descending widening wedge pattern where the bears will try to stop the rally. This is an important level that sellers must defend if they want to maintain the advantage.
Alternatively, the bulls will have to push and hold the price above the wedge to initiate a significant rally to 108. The 20 day EMA is flattening out and the RSI has jumped into the positive territory, indicating that Selling pressure may be easing.
USDT/BTC
Bitcoin has pulled back to the crucial support zone between $22,800 and the 20-day EMA ($22,489). This is an important area that bulls need to protect if they want to keep the uptrend intact.
If the price bounces from here, the bulls will try to push the BTC/USDT pair above $24,255 and challenge the overhead resistance at $25,000. The bears are expected to protect this level with all their might because a breakout and close above of $25,000 could indicate that the bear market is over.
Conversely, a deeper pullback comes into play if the price turns down and breaks below the 20 day EMA. Important levels to watch on the downside are $21,480 and the 50-day simple moving average ($19,697).
EUR/USDT
Ether (ETH) remains between the 20-day EMA ($1,591) and the overhead resistance at $1,680. This tight range trade is unlikely to continue for long and a breakout may occur soon.
If the price breaks below the 20-day EMA, the ETH/USDT pair could continue lower and reach towards $1,500. This level may attract buyers and a bounce will keep the pair in the $1,500 to $1,680 range for a few days.
The bears then need to sink the price below $1,500 to gain the upper hand. Then the pair could start a deeper correction to $1,352. On the other hand, buyers will have to push the pair above $1,680 to initiate a rally to $1,800 and then $2,000.
USD/USDT
Buyers pushed the BNB (BNB) price above the $335.50 resistance on Feb. 5. But the long wick of the candle shows that the bears are selling at higher levels. The price pulled back to the breakout level of $318 where the bulls are buying aggressively, as seen from the long tail of the February 6 candle.
The bears will have to sink the price below the 20-day EMA ($312) to clear the way for a drop to the 50-day SMA ($281).
Conversely, if the price rises from the current level and breaks above $338, it will suggest that the bulls have turned the $318 level into support. The BNB/USDT pair is likely to resume the rally and reach towards $360. This level should provide solid resistance, but if the bulls break above it, the next big hurdle will be $400.
USD/XRP
The failure of the bulls to push the XRP (XRP) price above $0.42 on Feb. 4 shows that the bears are fiercely protecting this level. Emboldened bears pushed the price below the 20-day EMA ($0.40) on February 5.
The price action of the past few days has flattened the 20-day EMA and the RSI has also slid close to the midpoint, indicating a balance between supply and demand. That could keep the pair range bound between $0.37 and $0.42 for some time.
If the bulls want to establish their dominance, they will have to push the price above the $0.42 to $0.44 resistance zone. If they do, the XRP/USDT pair has a chance to reach $0.51. Conversely, if the bears push the price below $0.37, the selling could intensify and the pair risks falling towards $0.32.
DOGO/USDT
The bulls again tried to clear the upper hurdle at $0.10 on Feb 4, but the bears held their ground. This sent Dogecoin (DOGE) back to the 20-day EMA ($0.09) on February 5.
The DOGE/USDT pair is stuck between the 20-day EMA and $0.10 for the past few days. Tight ranges usually resolve with a sharp range breakout, but it is difficult to predict the direction with certainty.
As the 20 day EMA slopes up and the RSI remains in the positive zone, the bulls have a slight advantage. If they push the pair above $0.10, the next stop could be $0.11. This level can act as a hurdle, but if the bulls break above it, the price of DOGE can go as low as $0.15.
This positive view will be invalidated in the short term if the price breaks below the 20 day EMA. Then the pair can reach the 50-day SMA ($0.08).
Related: Is BTC Price About to Retest $20K? 5 things to know about Bitcoin this week
ADA/USDT
The long tail on the Cardano (ADA) candle for February 5 shows that buyers are trying to turn the $0.38 level into support.
If the buyers want to strengthen their position, they will need to quickly push the price above the upper resistance at $0.42. If successful, the ADA/USDT pair could extend its up move to $0.44. This level can act as formidable resistance on the way up, but as long as the price remains above the 20-day EMA, the bulls will remain in control.
In order for the bears to regain the upper hand, they will have to sink the price below the 20 day EMA. That could tempt short-term bulls to book profits, putting Cardano’s price in danger of crashing down to the 50-day SMA ($0.32).
MATIC/USDT
The long wick on the February 4 candle for Polygon (MATIC) shows that traders may have booked profits near the overhead resistance at $1.30.
The rising 20-day EMA ($1.11) and the RSI in the positive area indicate that buyers are in command. The possibility of a break above $1.30 pushes the price higher from the current level or the 20-day EMA, which could push MATIC price as high as $1.70.
A minor negative on the chart is the negative divergence on the RSI. This indicates that the buying pressure is easing. If the bears sink the price below the 20-day EMA, MATIC can drop to $1.05 and then down to the 50-day SMA ($0.93).
POINT/USDT
Buyers are trying to protect the breakout level of the resistance line, but face selling on rallies. The RSI is showing negative divergence, but a minor positive is that the bulls have managed to hold Polkadot (DOT) above the 20-day EMA ($6.33).
The bulls will try to push the price above the overhead resistance at $7.13 and resume the up move. The next stop could be $7.42, where the bulls are likely to face strong selling pressure. If the buyers don’t give up much ground from $7.42, the DOT/USDT pair should have a good chance to rally to $8.
Contrary to this assumption, if the bears pull the price below the 20-day EMA, it will signal the start of a deeper correction. The support level to watch in case of a pullback is $6. But if it doesn’t hold, the decline can extend to the 50-day SMA ($5.43).
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
