The U.S. producer price index (PPI) fell 0.5% in December, marking the largest monthly decline since April 2020. This decline was much more than the 0.1% decline anticipated by economists surveyed by Dow Jones. The drop was largely due to a sharp decline in energy prices. Despite this decline indicating that inflation is cooling, the U.S. stock markets failed to hold onto their initial gains. The retail sales data also dropped 1.1% in December, which was slightly higher than the expected 1% decrease.
Meanwhile, the cryptocurrency market has seen a strong recovery in the past few days, with Bitcoin’s (BTC) trading volume soaring 114% over seven days. This strong volume and the sharp rise in prices indicate aggressive buying by the bulls, which increases the likelihood that Bitcoin’s November low at $15,476 may not be breached.
But how far could Bitcoin and other altcoins correct, and what are the important support levels to keep an eye on? Let’s dive in and study the charts of the top 10 cryptocurrencies.
Bitcoin (BTC) rose above the overhead resistance of $21,480 on Jan. 17 and Jan. 18, but the bulls could not sustain the higher levels, as indicated by the long wick on the candlesticks. This suggests that the bears are protecting the level, and the failure to sustain above the overhead resistance may attract profit-booking by short-term traders, potentially starting a short-term correction in the BTC/USDT pair. The first strong support is at the 38.2% Fibonacci retracement level of $19,489. If the price rebounds from this level, it will suggest that shallow dips are attracting buyers, and the bulls will again attempt to push the price above $21,480. If they succeed, the pair could start the next leg of the up-move to $25,000. However, if the price continues to fall below the 20-day exponential moving average (EMA) of $18,865, this bullish view could be invalidated.
Ether (ETH) has struggled to break above the formidable resistance of $1,600, although buyers managed to break above this level. They could not achieve a close above it, and the ETH/USDT pair could start a pullback that could reach the 38.2% Fibonacci retracement level of $1,439 and then the 20-day EMA ($1,400). This zone could attract buyers who may have missed the previous rally, resulting in a retest of the $1,600 resistance. If this level is surpassed on a closing basis, the pair could soar to $1,800 and then make a dash to $2,000. But if the price breaks below the 20-day EMA, it would suggest that the pair may continue to oscillate inside the large range between $1,250 and $1,600 for some time.
BNB (BNB) retreated from the overhead resistance of $318, and buyers bought the dip when the pair reached the 20-day EMA ($280) on Jan. 18, as seen from the long tail on the day’s candlestick. Buyers may try to build upon this momentum and push the price above the overhead resistance at $318. If successful, the BNB/USDT pair could march toward $338. If they manage to clear this hurdle, the pair could skyrocket to $400. However, if the price breaks below the 20-day EMA, it would suggest that the pair may continue to trade inside the large range between $250 and $338 for a while longer.
XRP (XRP) turned down and slipped to the moving averages on Jan. 18, but the long tail on the candlestick indicates aggressive buying at lower levels. The moving averages have also completed a bullish crossover, and the RSI is in the positive zone, indicating that bulls could prevail. A break and close above $0.42 could start an up-move that may hit the overhead resistance at $0.51. If bulls manage to pierce this resistance, the rally could stretch to $0.56. However, if bears manage to pull and sustain the XRP/USDT pair back below the moving averages, it may prevent the bulls from launching the price higher.
Cardano (ADA) has formed a bullish flag trading pattern in the past few days, and if buyers propel the price above the flag, it will point to a possible resumption of the up-move. The ADA/USDT pair could surge to $0.44 and then to the psychologically crucial level of $0.50, indicating that the downtrend may have ended. However, if the price breaks below the flag, the pair could slump to the 20-day EMA ($0.31), but if it rebounds off this level with strength, buyers may try to overcome the obstacle at $0.37. If that fails, a break below the moving averages could tilt the advantage back in favor of the bears.
Dogecoin’s (DOGE) recovery faced rejection near $0.09 on Jan. 14 and again on Jan. 18, indicating that the bears have not given up and are active at higher levels. Although the bears pulled the price below the moving averages on Jan. 18, they failed to sustain the lower levels. The gradually rising 20-day EMA ($0.08) and the RSI in the positive zone indicate that bulls have a slight edge. Buyers may try to push the price above $0.09 and start the northward march toward $0.11. But if the price closes below the moving averages, the DOGE/USDT pair may tumble to the critical support at $0.07.
Polygon (MATIC) failed to clear the overhead resistance of $1.05 on Jan. 16, with bears holding their ground. This repeated failure may tempt short-term traders to book profits, causing the MATIC/USDT pair to slump to the 20-day EMA ($0.90), suggesting that the pair may extend its stay inside the large range between $0.69 and $1.05 for some more time. However, if the price turns up and rises above $1.05, it will signal the start of a new up-move, with the pair rallying to $1.30.
Litecoin’s (LTC) up-move faltered near $91 on Jan. 14, and the bears pulled the price back to the 20-day EMA ($80) on Jan. 18. Buyers are trying to protect the level, and if the price turns up and climbs above $91, the LTC/USDT pair could soar to $100 and then to $107. But if the price slides below the 20-day EMA, the pair could reach the breakout level of $75, an important level for the bulls to defend. If this support cracks, the pair could plunge to $65.
Polkadot’s (DOT) 20-day EMA ($5.24) has started to turn up, and the RSI is near the overbought territory, indicating the path of least resistance is to the upside. If buyers drive the price above $6.53, the DOT/USDT pair could gain momentum and travel to $7.42 and thereafter to $8.05. However, if the price turns down and slips below $5.60, it will signal that bears are trying to make a comeback, and the sellers will come on top if they manage to sink the pair below the moving averages.
Avalanche (AVAX) skyrocketed above the downtrend line on Jan. 11, indicating a potential trend change. Buyers have the upper hand, with upsloping 20-day EMA ($14.42) indicating an advantage. However, the RSI is in the overbought zone, suggesting a period of consolidation or minor correction in the short term. If the price turns down and breaks below $15.50, the AVAX/USDT pair could drop to the 20-day EMA. A bounce off this level could increase the likelihood of a new up-move.
