As the year comes to an end, investors will be keenly watching for a Santa Claus rally on Wall Street as many believe that if the rally does not happen, the next year may either remain flat or turn negative.
Jurrien Timmer, director of global macro at asset management giant Fidelity Investments, tweeted on Dec. 19 that the United States equities markets may remain “sideways” and choppy in 2023. He expects “one or more retests of the 2022 low, but not necessarily much worse than that.”
The cryptocurrency market has been largely correlated with the S&P 500 in 2022. Unless both markets decouple, the sideways or negative action in the equities markets may not bode well for the cryptocurrency market.
Analysts remain divided on the future price action for Bitcoin (BTC). While some expect a recovery, others anticipate another leg lower. Let’s study the charts of the top 10 cryptocurrencies to determine the path of least resistance in the short term.
Although Bitcoin has been trading below the 20-day exponential moving average (EMA) of $16,985 since Dec. 16, the bears have not been able to capitalize on this situation. This suggests that lower levels are attracting buyers.
The BTC/Tether (USDT) pair saw slight gains on Dec. 20 and reached the 20-day EMA. This is an important level for the bears to defend in the short term because a break above it could set the stage for a possible rally to $17,622 and then to $18,387.
Alternatively, if the price turns down from the moving averages and breaks below $16,256, the selling may accelerate and the pair could dive to $16,000 and thereafter retest the pivotal level of $15,476.
The flattish 20-day EMA and the relative strength index (RSI) near 47 do not give a clear advantage either to the bulls or the bears. That could lead to a random volatile price action in the near term as both the buyers and sellers attempt to assert their supremacy.
Ether (ETH) rebounded off the nearby support at $1,150 on Dec. 20, suggesting that lower levels are attracting buyers. The relief rally has reached the 20-day EMA of $1,233 where the bears may mount a strong defense.
If the price turns down from the 20-day EMA, the bears will make one more attempt to pull the ETH/USDT pair below the support at $1,150. If they manage to do that, it will complete a head-and-shoulders pattern in the near term. This setup has a target objective of $948.
Instead, if buyers catapult the price above the moving averages, the pair may rally to $1,352. This level may again act as a major hurdle but if crossed, the rally could reach the downtrend line. The bears are expected to protect this level with all their might because a break above it could signal a potential trend change.
BNB (BNB) bounced off $220 on Dec. 17, but the pullback is facing strong selling at the breakdown level of $250. This suggests that bears are trying to flip the level into resistance.
The downsloping moving averages and the RSI near 40 indicate that bears are in command. If the price turns down and breaks below $236, the BNB/USDT pair could retest the support at $220. A break below this level could sink the pair to $200.
This negative view could invalidate in the near term if buyers force the price above the 20-day EMA of $265. The pair could then extend its relief rally to the 50-day simple moving average (SMA) of $286 and later to $318.
XRP (XRP) tumbled below the $0.37 support on Dec. 16, indicating that the bears have gained the upper hand in the near term. The price could oscillate in a wide range between $0.30 and $0.41 for the next few days.
Any relief rally is likely to face stiff resistance at the moving averages and again at $0.41. If the bulls want to gain the upper hand, they will have to catapult the price above $0.41. That could start a strong rally to $0.51.
On the downside, the crucial support to keep an eye on is $0.30. If this level cracks, the XRP/USDT pair could start the next leg down. The pair could then extend its decline to $0.25.
Dogecoin (DOGE) reached the important level of $0.07 on Dec. 19, where the bulls stepped in and are trying to arrest the decline. Buyers will try to push the price to the downtrend line, while the bears are likely to have other plans.
The downsloping moving averages and the RSI near the oversold territory indicate that the path of least resistance is to the downside. A weak bounce off $0.07 will increase the possibility of a break below the support. If that happens, the DOGE/USDT pair could plummet to the next major support at $0.05.
On the upside, the bulls will have to propel and sustain the price above the downtrend line to attract more buyers. The pair could then rise to the overhead resistance at $0.11.
Cardano (ADA) plunged below $0.29 on Dec. 16 and that aggravated the selling, pulling the price below the support line. The sharp fall on the day also invalidated the positive divergence developing on the RSI.
The ADA/USDT pair continued to skid and reached the strong support at $0.25. The oversold level on the RSI suggests that a recovery or a consolidation may be around the corner.
However, sellers are unlikely to give up their advantage easily and may pose a strong challenge at $0.27 and again at $0.29. If the price turns down from this overhead zone, the pair may again drop to $0.25.
The recovery may pick up pace after the price breaks above the 20-day EMA of $0.29 because that may lure short-term bears to book profits.
Polygon (MATIC) remained stuck inside a large range between $1.05 and $0.69 for the past few days. The repeated failure of the buyers to propel the price above $0.95 may have tempted short-term traders to book profits.
That started the downward journey in the MATIC/USDT pair toward the strong support of $0.69. Buyers are likely to defend this level aggressively because a break below it could intensify selling and pull the price to $0.52.
On the upside, the first hurdle could be at the 20-day EMA of $0.85. If the price turns down from this level, the likelihood of a break below $0.69 increases. On the other hand, if the bulls drive the price above the 20-day EMA, the pair could move up to $0.95.
Polkadot (DOT) remains in a strong downtrend with bears selling every minor rally. The failure to push and sustain the price above the 20-day EMA of $5.01 attracted heavy selling on Dec. 16, which resumed the downtrend.
The downsloping moving averages and the RSI near the oversold territory indicate that the bears remain in control. If the price breaks below $4.40, the next stop could be $4.00.
If bulls want to salvage the situation, they will have to quickly start a recovery and push the price above the 20-day EMA. Such a move will suggest accumulation at lower levels. The DOT/USDT pair may then rally to the 50-day SMA of $5.52. Sellers are likely to protect the zone between the moving averages with vigor.
Litecoin (LTC) dropped below the breakout level of $75 on Dec. 15, which may have triggered several stop losses. The selling continued on Dec. 16 and the price slipped below the 50-day SMA of $69.
Buyers are trying to start a recovery, but they may run into strong selling at the moving averages. If the price turns down from this overhead resistance, the bears will try to increase their advantage by yanking the LTC/USDT pair below $61. If this support cracks, the pair could drop to $52.
The first sign of strength will be a break and close above the 20-day EMA of $70. That could open the doors for a possible retest of $75. This remains the key level to watch out for on the upside because a break above it will suggest the start of a new up-move.
Uniswap (UNI) rebounded off the support line of the symmetrical triangle on Dec. 20, indicating that bulls continue to buy the dip to this level.
The recovery could first reach $5.50 and then to the 20-day EMA of $5.65. The bears are likely to sell on rallies to the 20-day EMA. If the price turns down from this level, the sellers will again try to sink the UNI/USDT pair below the triangle. If they succeed, the pair could start a new downtrend to $4.60.
Contrarily, if buyers thrust the price above the 20-day EMA, the pair could pick up momentum and rise toward the resistance line. The bulls will have to clear this obstacle to signal the start of a new up-move.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Market data is provided by HitBTC exchange.