Equities markets are witnessing aggressive selling due to increasingly bearish macroeconomic factors, and this is adding sell pressure to Bitcoin and altcoin prices.
The World Bank has warned of a possible global recession in 2023. In a press release on Sept. 15, the bank said that the current pace of rate hikes and policy decisions is unlikely to be enough to bring inflation down to pre-pandemic levels.
Ray Dalio, the billionaire founder of Bridgewater Associates said in a blog post on Sept. 13 that if rates were to rise to about 4.5% in the United States, it would “produce about a 20 percent negative impact on equity prices.”
The negative outlook for the equity markets does not bode well for the cryptocurrency markets as both have been closely correlated in 2022.
Daily cryptocurrency market performance. Source: Coin360
The macroeconomic developments seem to be worrying cryptocurrency investors who sent 236,000 Bitcoin (BTC) to major cryptocurrency exchanges on Sept. 14, according to Glassnode data. The inflow was the highest since March 2020.
Let’s study the charts of the S&P 500 index, the U.S. dollar index (DXY) and the major cryptocurrencies to determine the key levels that could signal the start of a trending move.
The S&P 500 index (SPX) attempted a rebound off the uptrend line on Sept. 14 but the weak rebound showed a lack of urgency to defend the level. Sellers took advantage of this situation and pulled the price below the uptrend line on Sept. 15.
SPX daily chart. Source: TradingView
The level of 3,886 from where the index had bounced on Sept. 6 also failed to provide any support, indicating that traders are in a hurry to sell their positions. Usually, the breakdown from a level tends to retest it.
In this case, the price could rise to the uptrend line. If the price turns down from this level, it will suggest that bears have flipped the uptrend line into resistance. That could increase the possibility of a drop to 3,700.
The downsloping 20-day exponential moving average (EMA) (4,006) and the relative strength index below 37 suggest that bears are in command.
If the price turns up and rises above the uptrend line, it will suggest that the breakdown on Sept. 15 may have been a bear trap. That could propel the index to the downtrend line.
The DXY is in a strong uptrend. The bears tried to pull the price below the moving averages but the bulls vigorously defended the 50-day simple moving average (SMA(107) on Sept. 13.
DXY daily chart. Source: TradingView
Both moving averages are sloping up and the RSI is in the positive territory indicating advantage to buyers. The bulls will next attempt to push the price above the overhead resistance at 110.78. This is an important level to keep an eye on because if the price sustains above this level, the rally could extend to 115.
If the price turns down from the current level or the overhead resistance and breaks below the 20-day EMA (109), it will suggest a consolidation in the near term. The price could then range between 107.58 and 110.78 for a few days. A potential trend change could be signaled if bears sink the price below 107.58.
Bitcoin formed a Doji candlestick pattern on Sept. 14, indicating indecision among the bulls and the bears. The uncertainty resolved to the downside on Sept. 15 but the bears have failed to build upon this advantage. This indicates that the selling pressure reduces at lower levels.
BTC/USDT daily chart. Source: TradingView
Buyers will attempt to salvage the situation by pushing the price above the 20-day EMA ($20,529). If that happens, the BTC/USDT pair could rise to the overhead resistance at $22,799. The bears may defend this level aggressively but if bulls thrust the price above it, the pair could rally to $25,211.
Contrarily, if the price turns down from the current level or the 20-day EMA, it will suggest that the sentiment remains negative and traders are viewing rallies as a selling opportunity. That could sink the pair to the strong support at $18,510. The zone between $18,510 and $17,622 could witness aggressive buying from the bulls because the failure to defend this zone may start the next leg of the downtrend.
Ether (ETH) bounced off the support line on Sept. 14 but the joy of the bulls proved to be short-lived. The price turned down sharply from the 20-day EMA ($1,609) and plunged below the support line on Sept. 15.
ETH/USDT daily chart. Source: TradingView
The 20-day EMA has started to turn down and the RSI has slipped below 39, indicating that bears are in control. The sellers have pulled the price to $1,422 and if this support cracks, the ETH/USDT pair could drop to $1,280.
If the price turns up from the current level, the pair could recover to the moving averages, which may act as a strong resistance. The bulls will have to clear this hurdle to suggest that the selling pressure could be reducing.
The bears pulled BNB below the immediate support at $275 but they are struggling to keep the price down. This indicates that lower levels are attracting buyers.
BNB/USDT daily chart. Source: TradingView
If the price sustains above $275, the BNB/USDT pair could be in the early stages of forming a symmetrical triangle. This suggests uncertainty about the next directional move among the bulls and the bears. That could keep the price inside the triangle for some time.
If the price rises above the 20-day EMA ($283), the pair could rally to the resistance line of the triangle. A break above the triangle could push the pair to $338.
Another possibility is that the price turns down from the 20-day EMA and plummets below the support line of the triangle. That could start a decline to $258 and later to $239.
Ripple (XRP) has been range-bound between $0.30 and $0.39 for the past several weeks. In the past few days, the range has shrunk further with bulls buying the dips to $0.32 and bears selling the recovery to the 50-day SMA ($0.35).
XRP/USDT daily chart. Source: TradingView
The price action inside a range is usually volatile and difficult to call. Still, as the buyers had successfully defended the $0.32 support between Aug. 28 and Sept. 7, they will again try to do that. If the price rises from the current level, the XRP/USDT pair could rally to the 20-day EMA ($0.34) and later to the 50-day SMA.
If bulls drive the price above the 50-day SMA, the likelihood of a rally to $0.39 increases. The bears are expected to defend this level aggressively. On the downside, if the price slips below $0.32, the crucial support of $0.30 may be retested.
The bears are attempting to build upon their advantage in Cardano (ADA). They sold the recovery to the 20-day EMA ($0.48) on Sept. 14 and are trying to pull the price below the immediate support at $0.45.
ADA/USDT daily chart. Source: TradingView
Although moving averages are not a valuable tool in a ranging market, they tend to be helpful to determine the short-term trend. The 20-day EMA has started to turn down and the RSI is in the negative territory, indicating advantage to bears. If the price slips and sustains below $0.45, the ADA/USDT pair could drop to $0.42.
If bulls want to gain the upper hand, they will have to arrest the decline and push the price above the moving averages. That could clear the path for a rally to the downtrend line. A break above this resistance could indicate that the bulls are back in the driver’s seat.
Solana (SOL) turned down from the 20-day EMA ($33.84) on Sept. 15, indicating that the sentiment remains negative and bears are selling on minor rallies.
SOL/USDT daily chart. Source: TradingView
The SOL/USDT pair could decline to the strong support at $30. This level was resilient during the onslaught between Aug. 28 and Sept. 7 and gave a bounce to $39 on Sept. 13. Short-term traders may again expect a bounce off $30 and are likely to buy the dips to this level.
The rebound off the support could continue to face hurdles at the 20-day EMA and then again at the 50-day SMA ($36.95). If the price closes above this resistance, it could open the doors for a possible up-move to $48. Conversely, if the $30 level cracks, the pair could slide to the vital support at $26.
Dogecoin (DOGE) has continued its slide and is near the strong support of $0.06. The price rebounded off this level on Sept. 7; hence, it may again attract buyers.
DOGE/USDT daily chart. Source: TradingView
A break and close above the 20-day EMA ($0.06) will be the first sign of demand building up at higher levels. The DOGE/USDT pair could then rise to $0.07. This level may again act as a resistance but if bulls push the price above it, the pair could rise to $0.08 and thereafter to $0.09.
If the price slips below the immediate support at $0.06, the pair could slide to the June low near $0.05. The bears will have to sink and sustain the price below this level to signal the start of the next leg of the downtrend. The pair could then extend the decline to $0.04.
The bulls attempted to start arecovery on Sept. 14 but higher levels attracted selling by the bears. Polkadot (DOT) turned down on Sept. 15 and the bears are trying to sink the price below the immediate support of $6.75.
DOT/USDT daily chart. Source: TradingView
Buyers had successfully defended the $6.75 level on two previous occasions; hence, a break and close below it may intensify selling. The DOT/USDT pair could first drop to $6.50 and later to the crucial support at $6.
As the previous three recoveries have turned down from the 50-day SMA ($7.86), it remains the key level to watch out for on the upside. The bulls will have to overcome this barrier to start a rally to $9.17 and then to $10.
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Market data is provided by HitBTC exchange.