This week the S&P 500 made news by hitting an all-time intraday high and recouping 100% of the losses caused by the coronavirus pandemic in mid-March.
Despite this, there are signs that U.S. stock markets may overvalue. The Buffett indicator, an analysis tool that divides the Wilshire 5000 Indicator by U.S. GDP, is yet to show 1.7. This figure is quite close to the peak of the dot-com era with 1.71, which comes after a strong market correction.
However, an important difference between today and the dot-com era is that current interest rates are at record lows and central banks are pumping large amounts of money to support the economy.
While some pockets may look like bubbles, stock markets are unlikely to crash just because of this metric.
Daily crypto market data outlook. Source: Coin360
If the stock market crashes, Bitcoin (BTC) may initially fall due to sour sentiment, but the price is unlikely to remain low for a long time because traders selling their positions on exchanges will look to safe-haven assets to park their money.
Recent Bitcoin investments by hedge fund manager Paul Tudor Jones and the growing institutional inflow in Grayscale Investments products show that investors are looking at Bitcoin as a store of value and a hedge against inflation.
Over the past few months, several altcoins have performed much better than Bitcoin. Let’s take a look at a few altcoins that could be successful in the next few days. BTC / USD
The bulls pushed Bitcoin above the $12,304.37 resistance on August 17, but failed to stay above it. This pulled profit booking by short-term traders on August 18 and pushed the price down to the 20-day exponential moving average ($11,568).
BTC/USD daily chart. Source: TradingView
The average directional index (ADX), a component of the directional movement indicator, remains strong above 35, but the positive directional indicator (+DI) and the negative direction indicator (-DI) are convergent, and the 20-day EMA has flattened, suggesting a range-dependent action in the near term.
If the bears can keep the BTC/USD pair below the 20-day EMA, a fall to the $11,000 – $10,900 region is possible. The bulls are likely to aggressively defend this zone and if successful, the pair could rally back to $12,304.37. A break and close above this resistance (UTC time) can restart the upward movement.
However, if the bears break the price below $10,900, $10,400 is likely to be retested. This is an important support to look out for, because if this is broken, the feeling will be largely negative.
BTC/USD 4-hour chart. Source: TradingView
-DI + DI is above and the 20-EMA is leaning downward on the 4-hour chart, indicating that the bears have the upper hand in the short term. They are selling aggressively on pullbacks to the 20-EMA.
On the downside, the $11,000 level is likely to act as a strong support. A strong bounce will keep the pair in the range of $11,000 – $12,304.37 for a few days.
The first sign of strength will be a break above the 20-EMA as this will indicate a change in sentiment in the short term. ETH / USD
The bulls’ inability to hold Ether (ETH) above the immediate support of $415,634 resulted in profit booking by short-term traders. This pushed the price below the 20-day EMA ($393), which is a negative sign.
ETH/USD daily chart. Source: TradingView
The next support on the negative side is $366. If the price bounces back from this level, it will show that the bulls are defending this support. The 20-day EMA has flattened and + DI and -DI are close together, indicating a balance between supply and demand.
This points to a possible range-bound action between $366-446,479 for a few days. A break above the range can sustain the uptrend, while a break below it can cause the next support to fall at $320.
ETH/USD 4-hour chart. Source: TradingView
The 4-hour chart shows -DI above + DI and the 20-EMA leaning downwards, which gives the bears an advantage in the short term. Previously, the $366 support had acted as a strong support, so the bulls will try to defend this level again.
A strong bounce could lead to a rise to $415,634. If the price breaks out of this resistance, a range of action of several days is possible.
Conversely, if the $366 support is broken, there will be a major downside that could lead to a fall to $320. ATOM / USD
Cosmos (ATOM) broke above the $7,249 resistance today, which is a big positive because it indicates a possible resumption of the uptrend. The ADX is above 30 and + DI is above -DI, which indicates that the bulls have the upper hand.
ATOM/USD daily chart. Source: TradingView
If the bulls can close the price above $7,249 (UTC time), the next target to watch out for is $8.50 followed by $10.
However, if the bears sell at higher levels and push the price below $7,249, a fall to $6,604 is possible. If the ATOM/USD pair bounces back from this support, the bulls will try to resume the uptrend again.
Conversely, if the bears break the price below and sustain $6,604, it will indicate that the momentum is weakening. Below this support, there is a possibility of a fall to $5,423.
ATOM/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that bullish momentum is building up after buyers pushed the price above the $6,604 resistance. Although the bears tried to stop the upward move at $7,249, the bulls’ strong buying absorbed all the sell-offs.
The 20-EMA is rising and +DI is above -DI, which indicates that the path of least resistance is to the upside. A break below $7,249 will be the first sign that bullish momentum is weakening. NEO / USD
The ADX in NEO is above 57 and the 20-day EMA ($15.38) is rising, indicating that the trend is supporting the bulls. However, the bears are trying to stop the rise at $19.82219.
NEO/USD daily chart. Source: TradingView
This could result in a small correction or consolidation that is likely to find support at the 20-day EMA at $16.72441 and below.
If the NEO/USD pair bounces back from any of the supports, the bulls will once again try to push the price above $20.9633. If they succeed, the next upside target is $25.23.
If the bears push the price below the 20-day EMA, this bullish outlook will be invalid. Such a move would indicate a weakening of momentum.
NEO/USD 4-hour chart. Source: TradingView
The 4-hour chart shows that the bears are aggressively defending the overall resistance at $19.82219. At the moment, the 20-EMA is rising, which suggests that the advantage is in the bulls.
If the price breaks above this level, the bulls will make another attempt to push the price above resistance. If they succeed, the upward trend will continue.
Conversely, a break below the 20-EMA will weaken the bullish momentum and could lead to a decline to the $15.64796 – $16.72441 support zone. A bounce from this zone could keep the pair tied to the range for a few days. KRO/USD
Crypto.com Coin (CRO) has capped between $0.15306 and $0.176596 for the past few days. In an uptrend, when the price consolidates near general resistance, this is a positive sign because it indicates that the bulls are not closing their positions in a hurry.
CRO/USD daily chart. Source: TradingView
ADX is above 31 and + DI is above -DI, which means that the advantage is in the bulls. Although the bulls pushed the price above $0.176596 on August 21, they were unable to sustain higher levels.
However, the positive thing is that buyers have not allowed the price to stay below the 20-day EMA ($0.164). If the bulls can push the price above $0.176596 again, the uptrend is likely to continue.