A Little Leadership and Nothing New
First and foremost, the bulls want to see Bitcoin reclaim those September highs around 53,000:
As you can see, there's still more work to do. But one positive characteristic here is that momentum was barely able to hit oversold during the recent selloff. With a daily RSI-14 reading of 29.90, this is as close as it gets.
Momentum has been curling higher and diverging positively even as price made new lows into last week. This tells us that sellers are getting tired.
Now let's do Ethereum:
We're ever so slightly back above the critical 4,000 level, but we need to see some follow-through in the coming days. This has been the stronger of the two behemoths in recent months. Notice how the RSI-14 couldn't even breach 40 recently.
The strongest uptrends tend not to get oversold, and that's exactly what we're seeing in Ethereum right now, as prices try to hook higher and reclaim those first-half highs.
Another big level we're watching right now is those May highs in the Top 5 Crypto Index:
Notice how momentum could not hit oversold in this index just like Ethereum. We really want to see buyers reclaim this level before we start to redeploy capital and bet on a fresh leg higher for the broader crypto market.
Since we believe the primary uptrend is still intact and this is simply a consolidation that will eventually resolve higher, let's check in on some strong tokens that we can use as vehicles to express a long thesis when the time comes.
First up is Elrond $EGLD:
Notice how price is above its first-half highs on both absolute and relative terms? These are some of the main characteristics we're looking for to identify the strongest tokens these days.
And while it's not shown in the chart, momentum was unable to hit oversold during the recent selloff. This is another thing we're looking for as not getting oversold is evidence of a strong uptrend.
Next up is Helium $HNT:
Notice how it looks just like Elrond from above. All the same bullish traits we just discussed are evident here also.
Here's Harmony $ONE now with a nice little bull hook back above its March and September highs:
As long as we hold above this former resistance zone, this one is also on the leader list.
Last but not least, here's Avalanche $AVAX:
AVAX has really been a standout of late and is hitting new all-time highs relative to Bitcoin as I write. We think it's only a matter of time until we see the same thing on an absolute basis.
Now let's talk about how all of these leaders have three major things in common.
They are above key former highs on absolute terms. They are also above key former highs relative to Bitcoin. And they have not hit oversold during the recent corrective phase and thus remain in bullish momentum regimes. These are all classic leadership traits, and we're always looking out for them.
Of course, there are many other strong cryptocurrencies out there right now, including Axie Infinity, Solana, Terra, Decentraland, and many others. This was simply meant to be a case study of the kind of behavior we want to see when identifying future winners.
Now let's discuss how we move forward in a macro-environment that doesn't exactly favor the bulls over the near term.
Can we still buy some of these outperformers while we wait for the present volatility to pass? Of course. But we're currently in an environment where participation is narrow and there aren't many favorable long setups.
At the same time, our odds are always improved when we have the broader market at our backs. And this simply isn't the case for now.
With that said, when the selling pressure levels off and we see prices resume higher for Bitcoin, Ethereum, and the overall crypto market, these are the coins we want to make sure we own.
Keep them close and monitor them in the meantime. We'll be doing the same, and will be right here talking about it when the time comes to get more aggressive!
Until then, less is more. Don't force it. We believe there will be plenty more opportunities in the future.
Allstarcharts Team.