Last week, the stock markets in the United States continued their upward momentum, despite Federal Reserve Chair Jerome Powell’s announcement that a rate cut in March was unlikely. However, Powell did mention that a rate cut could potentially happen later this year.
Powell reiterated these views during his interview on the CBS news show 60 Minutes. As a result, expectations of rate cuts by the Fed for 2024 decreased from 150 basis points to 120 basis points, according to Fed funds futures. This caused the U.S. dollar Index (DXY) to reach its highest level in 11 weeks.
Bitcoin, which historically moves inversely to the U.S. dollar, may face challenges in the near future due to the strength of the greenback. However, there is a slight positive for Bitcoin bulls, as BlackRock and Fidelity’s spot Bitcoin exchange-traded funds (ETFs) saw significant inflows in January, totaling about $4.8 billion. Continued inflows into these ETFs could help limit any potential downside for Bitcoin.
The question remains whether Bitcoin will remain range-bound or if a breakout is on the horizon. Additionally, how will altcoins behave? Let’s analyze the charts to gain some insights.
S&P 500 Index:
On February 1, the S&P 500 Index bounced back from the 20-day exponential moving average (4,850) and reached a new all-time high on February 2. Both moving averages are trending upwards, indicating that the bulls are in control. However, caution is warranted due to the negative divergence on the relative strength index (RSI). The psychological resistance of 5,000 may pose a challenge for the upward movement, but if buyers can push through, the next target could be 5,200. On the downside, the 20-day EMA is a crucial support level. A drop below this level would indicate a shift in sentiment and may lead to a decline to the 50-day simple moving average (4,734) and potentially even lower to 4,650.
U.S. dollar Index:
On February 2, the U.S. dollar Index experienced a sharp rebound from the 50-day SMA (102.84) and broke above the neckline of an inverted head-and-shoulders pattern. The target for this bullish setup is 107.39, just below the strong overhead resistance at 108. However, bears are likely to put up a fight, attempting to halt the upward movement near 104.55 and 106. To regain control, bears will need to push the price below the 50-day SMA, which could trigger a decline to the vital support zone between 101 and 99.57. Bulls are expected to defend this zone vigorously.
Bitcoin:
Despite repeated attempts by bears, Bitcoin has managed to stay above the 20-day EMA ($42,463), indicating strong defense from bulls. Buyers will aim to push the price to the overhead resistance zone of $44,000 to $44,700. This zone is critical for bears to defend, as a failure to do so could propel the BTC/USDT pair to the psychological level of $50,000. However, if the price turns down from $44,700, the pair may consolidate within a tight range. Bears will gain control if they manage to sink the pair below $41,394, leading to a potential slide to $40,000 and eventually $37,980.
Ether:
Ether has been trading below the moving averages for some time, but bulls have successfully prevented the price from dropping to the strong support level at $2,100. This suggests buying interest at lower levels. Bulls are now attempting to push the price above the moving averages, with a potential challenge at the $2,400 level. A break and close above this resistance would indicate bullish dominance and could lead to a rise to $2,600 and potentially the Jan. 12 intraday high of $2,717. On the other hand, a rejection from the overhead resistance would signal bearish activity at higher levels, keeping the pair range-bound between $2,100 and $2,400 for some time.
BNB:
On February 4, BNB bounced off the 50-day SMA ($300), but bulls are struggling to gain momentum. To invalidate the descending triangle pattern, buyers will need to overcome the overhead hurdle at the downtrend line. If successful, the BNB/USDT pair could rally to $320 and potentially reach $338. Conversely, if the price turns down and breaks below the 50-day SMA, it would indicate continued selling pressure from bears. The pair may then drop to the strong support level at $288. If this support level breaks, it would complete a bearish setup, potentially leading to a decline to $260.
XRP:
XRP has been unable to sustain a break below $0.50 on several occasions, leading to a recovery towards the 20-day EMA ($0.53) on February 3. However, the price turned down from the 20-day EMA on February 4, indicating negative sentiment and selling pressure from traders. If the $0.50 support level is breached, the XRP/USDT pair could plunge to $0.46. On the other hand, a reversal from the current level and a break above the 20-day EMA would suggest strong defense from bulls at the $0.50 support level. Positive divergence on the RSI also indicates potential recovery in the near term. If buyers manage to push the price above the 20-day EMA, the pair may attempt a rally towards the downtrend line.
Solana:
Solana is currently experiencing a battle between bulls and bears near the moving averages. The price action of the past few days is forming an inverse head and shoulders pattern, which will complete on a break and close above $107. This bullish setup has a target objective of $125. A minor resistance at $117 may be crossed. However, if the price breaks and stays below the moving averages, it would indicate weakness from bulls. The SOL/USDT pair may then decline to $79, an important level for bulls to defend. A break below this level may lead to a further drop to $64.
Cardano:
Cardano has been hovering near the 20-day EMA ($0.50), indicating indecision between bulls and bears. The 20-day EMA has flattened out, and the RSI is just below the midpoint, suggesting range-bound action in the near term. If buyers can push the price above the 20-day EMA, the ADA/USDT pair may rise to the downtrend line, which must be overcome to signal a potential trend change. On the downside, a break below $0.48 would indicate bearish pressure, potentially leading to a slide to $0.46 and later to the channel’s support line.
Avalanche:
Avalanche reversed its direction from the downtrend line on February 3 and bulls are attempting to defend the 20-day EMA ($34.55). If the price turns up from the current level, it would increase the chances of a break above the descending channel. This could propel the AVAX/USDT pair to $44 and potentially even $50. However, bears must quickly push the price below the immediate support at $32 to prevent an upward move. If they succeed, the pair may decline towards the channel’s support line near $24.
Dogecoin:
Dogecoin continues to trade below the 20-day EMA ($0.08), but bulls have managed to prevent a dip below the uptrend line of the symmetrical triangle pattern. If the price turns up and breaks above the 20-day EMA, it would suggest that the DOGE/USDT pair may continue trading within the triangle for some more time. The pair may attempt to rise towards the downtrend line. The next major move is likely to occur on a break above or below the triangle. A surge above the triangle could lead to a rise towards the $0.10 to $0.11 resistance zone, while a break below the triangle could result in a decline towards $0.07 and then $0.06.
This article is for informational purposes only and does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment decisions.