Bitcoin and altcoins surged ahead of July 27’s FOMC meeting, but will the expected 75 basis point rate hike cap the current rally?
United States equities and cryptocurrency markets are heading into the Federal Reserve’s interest rate decision on July 27 on a positive note. This suggests that the market participants believe the Fed will deliver a 75 basis point rate hike, which is in line with market expectations.
Some economists expect the Fed to calm the markets by indicating less aggressive rate hikes in the future. Trading firm QCP Capital said that the market reaction has been positive to all the Federal Open Market Committee meetings this year and they expect the same with the latest one as well.
Daily cryptocurrency market performance. Source: Coin360
Analysts are divided on the next directional move for Bitcoin (BTC). After the event has passed, some expect Bitcoin to turn down from the current level and drop to a new year-to-date low while others expect the recovery to pick up steam.
Do the charts support a relief rally or a further fall? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin broke below the 20-day exponential moving average (EMA) ($21,738) on July 25 and re-entered the symmetrical triangle pattern. This suggests that the recent breakout from the triangle may have been a bull trap.
BTC/USDT daily chart. Source: TradingView
The 20-day EMA has flattened out and the relative strength index (RSI) is just below the midpoint, indicating a range-bound action in the near term. The price may remain stuck between the support line and $24,276 for a few days.
If buyers drive the price above the moving averages, the BTC/USDT pair could rise to the overhead resistance at $24,276. The bulls will have to clear this hurdle to signal the start of a new up-move.
Conversely, if the price turns down from the moving averages, the bears will try to pull the pair to the support line. A break below this level could open the doors for a possible drop to $18,626 and then to $17,622.
Ether (ETH) turned down from the overhead resistance and dropped to the 20-day EMA ($1,406) on July 26. The long tail on the candlestick shows strong buying at lower levels.
ETH/USDT daily chart. Source: TradingView
The bulls will attempt to push the price to the overhead resistance at $1,700. This is an important level to watch out for because a break and close above it will signal a potential change in trend. The ETH/USDT pair could then rise to $2,000.
On the contrary, if bulls fail to achieve a strong rebound off the 20-day EMA, it will suggest a lack of aggressive buying. That could increase the possibility of a drop to $1,280. A strong rebound off this level could indicate a range-bound action in the near term but a break below it may sink the pair to $1,000.
BNB rebounded off the 50-day simple moving average (SMA) ($239) on July 26, indicating that the bulls are attempting to flip this level into support. The buyers have pushed the price above the 20-day EMA ($250) and will try to challenge the downtrend line.
BNB/USDT daily chart. Source: TradingView
If bulls propel the price above the downtrend line, it will suggest a potential change in trend. The BNB/USDT pair could then climb to the resistance line of the ascending channel where the bears may mount a strong defense.
Alternatively, if the price turns down from the current level or the downtrend line, it will suggest that bears are active at higher levels. The sellers will then make another attempt to sink the pair below the support line of the channel. If they do that, the pair could slide to the strong support at $211.
Ripple (XRP) dropped below the moving averages on July 25, opening the doors for a possible drop to the strong support at $0.30. In a range, traders usually buy near the support and sell at the resistance.
XRP/USDT daily chart. Source: TradingView
Therefore, the bulls are likely to defend the $0.30 level aggressively. A strong rebound off this level could keep the XRP/USDT range-bound between $0.30 and $0.39 for a few days. The flattish moving averages and the RSI just below the midpoint signal a consolidation in the near term.
The next trending move could begin after bears sink the price below $0.30 or bulls drive the pair above $0.39. Until then, volatile range-bound action is likely to continue.
Cardano (ADA) dropped and closed below the moving averages on July 25. The bears tried to sink the price below the strong support at $0.44 but the bulls held their ground.
ADA/USDT daily chart. Source: TradingView
The buyers are attempting to push the price above the moving averages. If they do that, the ADA/USDT pair could rise to the overhead resistance at $0.55. The bears are expected to mount a strong defense at this level but if bulls overcome this barrier, the pair could climb to $0.63 and then to $0.70.
Conversely, if the price turns down from the moving averages and breaks below $0.44, the next stop could be $0.40. A break below this level could indicate the resumption of the downtrend.
Solana (SOL) dipped below the moving averages and reached the support line on July 26. The bulls are attempting to defend the level but are struggling to push the price above the moving averages.
SOL/USDT daily chart. Source: TradingView
This suggests that demand dries up at higher levels. The 20-day EMA ($38) is flattish and the RSI is just below the midpoint, indicating equilibrium between buyers and sellers. This advantage could tilt in favor of the bears if the price breaks and closes below the support line. If that happens, the SOL/USDT pair could slide to $30.
To invalidate this bearish view, the buyers will have to push the price above the 20-day EMA. If they do that, the pair could climb to the overhead resistance at $48. A break and close above this level will complete the ascending triangle pattern, which has a target objective at $71.
Dogecoin (DOGE) slipped below the trendline on July 26 but the bears could not sustain the lower levels. The bulls bought the dip and pushed the price back into the ascending triangle.
The moving averages have started to slope down and the RSI is in the negative territory, indicating that bears have the upper hand. If the price turns down and closes below the trendline, the likelihood of a drop to $0.05 increases.
Contrary to this assumption, if the price turns up from the current level and breaks above the moving averages, the DOGE/USDT pair could rise to the overhead resistance at $0.08. The bulls will have to clear this hurdle to complete the ascending triangle pattern. The pair could then rally to the pattern target at $0.11.
Polkadot (DOT) has been trading between the critical support at $6 and the 50-day SMA ($7.36) for the past few days. Although the 20-day EMA ($7.13) is flat, the RSI in the negative territory indicates a slight advantage to sellers.
DOT/USDT daily chart. Source: TradingView
If the price turns down from the current level or the 50-day SMA, the bears will make another attempt to sink the DOT/USDT pair below $6. If they succeed, the pair could start the next leg of the downtrend.
On the other hand, if the price rises and breaks above the 50-day SMA, it will signal demand at lower levels. The pair could then rise to $8.79 where the bears may again offer a stiff resistance. A break and close above this level could open the doors for a rally to $10.
Polygon (MATIC) slipped below the 20-day EMA ($0.75) on July 26 but the bulls purchased the dip as seen from the long tail on the day’s candlestick.
MATIC/USDT daily chart. Source: TradingView
The buyers are attempting to resume the up-move which could face strong selling at the resistance line. If bulls clear this overhead hurdle, the momentum could pick up and the MATIC/USDT pair could rally to the psychological level at $1. A close above this level could open the doors for a rally to $1.26.
Contrary to this assumption, if the price turns down from the resistance line, it will increase the possibility of a break below $0.75. If that happens, the index could slide to $0.63.
Avalanche (AVAX) dropped below the breakout level of $21.35 on July 25, indicating that bears are aggressively selling on rallies. A minor positive is that the bulls are attempting to defend the 50-day SMA ($19.45).
AVAX/USDT daily chart. Source: TradingView
The 20-day EMA ($21.43) has flattened out and the RSI is near the midpoint, indicating a balance between supply and demand. This advantage could tilt in favor of the sellers if the price breaks below the support line.
On the contrary, if the index sustains above the 20-day EMA, the AVAX/USDT pair could rally to $26.50. The bulls will have to clear this overhead hurdle to signal the resumption of the up-move. The pair could then rally toward $33.
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.