Crypto Update: Altcoins Crash As Correction Deepens

The major cryptocurrencies got hit hard today, as the overbought correction that started on Saturday quickly escalated in the weekend environment. The most overbought altcoins, such as ETH and XRP fell the most, wiping out almost all of the latest leg higher. While today’s selloff was scary, it didn’t change the underlying bullish trend, and the freshly formed long-term trends are intact. Given the lofty gains of the past few weeks, the correction could further deepen, but we expect the rally to resume afterward.

Our trend model remains on short-term sell signals despite the fact that the top coins already all but cleared the overbought short-term momentum readings. The euphoric sentiment of the past week usually leads to a more sustained correction. While the market-leading ETH successfully defended its steeply rising short-term trend, a deeper correction will likely be needed to reset investor sentiment and provide a base for another leg higher.

BTC/USD, 4-Hour Chart Analysis

BTC has been showing relative strength during today’s plunge, as we expected, after being weak for an extended period. BTC’s stability is encouraging, even as it dipped below its rising short-term trendline, as it might be the sign of a bullish rotation in the segment. The $10,000 level remains in focus, and since the coin is now neutral from a short-term momentum perspective, it could be among the first majors to form a swing low.

BTC is now on a short-term sell signal while still being on a long-term buy signal in our trend model, with support zones now found near $9,200, $8,600, and $8,400, and with resistance ahead near $10,000, $11,300, and $13,000.

ETH/USD, 4-Hour Chart Analysis

ETH dipped briefly below its rising short-term trendline today, which is currently the most important technical pattern in the crypto-market. The coin bounced back above the trendline, despite the surge in volatility, but it faces strong resistance near $260 and the parabolic nature of its recent rally suggests that a deeper correction is ahead.

Our trend model is now on a short-term sell signal while still being on a long-term buy signal, with major support zones found near $230, and $200, and with resistance zones ahead near $260, $275, $290, and $300.

XRP Tests $0.28 While LTC Violates $75

XRP/USD, 4-Hour Chart Analysis

XRP got hit the hardest among the majors from a technical perspective today, as it not just fell below $0.30 but also violated the $0.28, albeit briefly. The coin also dipped below its rising short-term trendline and it remains the closest to its previously dominant declining long-term trendline too. The correction already cleared the coin’s overbought short-term momentum readings, but until we see a confirmed swing low, traders shouldn’t enter new positions here.

Our trend model is now on a short-term sell signal while still being on a long-term buy signal with support zones found near $0.30, $0.28, and $0.26, and with resistance zones ahead near $0.32, $0.33, and $0.3550.

LTC/USD, 4-Hour Chart Analysis

LTC remains clearly below its short-term trendline, and it also fell below the key support zone between $72.50 and $75. The coin, which has been leading the way higher in the early stages of this year’s rally, could be in for a deeper pullback, but given its recent relative weakness, it could be among the first majors to form a swing low. LTC is in a similar technical position to BTC and should the bullish rotation continue, it could be once again leading the charge following the correction.

LTC is now on a short-term sell signal while still being on a long-term buy signal in our trend model, with support zones now found near $72.5, $64, $56, and $51, and with resistance zones ahead near $75, $85, and $90.

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Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.