When an asset is overbought and traders are making big profits, even minor negative news and events can trigger profit taking. This seems to have happened after Janet Yellen’s negative comments about cryptocurrencies during a virtual hearing at the US Senate Finance Committee.

At the same meeting, Yellen called on Congress to “act aggressively” to bolster the US economy. Another round of stimulus is likely to weaken the US dollar and lead investors to assets deemed to be of value. This means Yellen’s comments could inadvertently boost sentiment on gold and bitcoin (BTC).

Since the fundamentals that support upside potential today are still in place, institutional investors who missed gains at lower levels can use the current low to build their positions.

Glassnode data shows that large investors are actively adding bitcoins to their portfolios, and the number of portfolios containing more than 1,000 bitcoins has climbed to new all-time highs. Since the beginning of 2021, 164 new wallets have been created with over 1,000 bitcoins, which suggests that the whales are optimistic despite the current BTC price correction.

Let’s examine ten cryptocurrency charts to determine the critical support levels at which buyers can start picking cherries.

Bitcoin / US dollar
Bitcoin broke below the symmetric triangle pattern, but the bulls are currently trying to defend the 20-day exponential moving average ($ 34,626). In an uptrend, traders buy on the downturn to the 20-day moving average, as this provides an opportunity to reduce risk, and the rebound from it repeats the strength of the trend.

The 20-day moving average disappears and the RSI gradually declines from deep overbought territory to the midpoint, indicating an equilibrium between supply and demand.

If the BTC / USD pair remains below the 20-day moving average, it could dip to the 38.2% Fibonacci retracement level at $ 29,688.10. The bulls are likely to strongly defend this support. If they succeed, this level could act as support for the site and $ 40,000 as resistance.

The positive outlook could be canceled out if the bears push the price below the 50-day moving average ($ 27,596). Such a move could open the possibility of a fall to the 61.8% Fibonacci retracement level at $ 22,106.73.

Ether (ETH) rallied to a fresh constant high on January 19, indicating that the bulls have a team. Bullish moving averages and RSI near overbought territory indicate that the path of least resistance is pointing up.

Usually, after each breakout of resistance, the price returns to test the level again. The same thing happened with the ETH / USD pair as the bulls try to turn $ 1,300 into support. If they succeed, this level will become a new platform.

The long tail of the daily candle indicates that traders are buying below $ 1,300. If they manage to close the price above $ 1,300, the pair may try to resume the trend. If the bulls pushed the price above $ 1,438,318, the pair could rise to $ 1,675.

Contrary to this assumption, if the pair falls and holds below $ 1300, the next fall is likely to be the 20-day moving average ($ 1129). A bounce off this support could indicate that sentiment remains bullish, but if the bears drop the pair below the 20-day moving average, a short-term top could be in place.

After sharp demonstrations in recent days, Polkadot (DOT) has made a slight correction. Today altcoin fell to 38.2% Fibonacci retracement level at $ 14.7259, which acts as strong support.

The long tail of today’s candle shows that traders are not looking for a deeper buying correction as they expect higher levels in the future. If the bulls manage to push the price above $ 19.40, the trend could resume with the next target of $ 24 and then $ 30.

Contrary to this assumption, if the bears fall below $ 14.7259, selling could rise and the pair could fall to the 50% retracement level of $ 13.2821 and then to the 20-day moving average ($ 12.32).

If the pair moves away from the 20-day moving average, it would mean that the trend is still intact, but if this support breaks, the decline could continue to $ 11.8383. The deeper the correction, the longer this correction will last before the trend resumes.

Source: CoinTelegraph