Crypto Update: Another Bounce Fails but Key Support Levels Still Safe

The cryptocurrency segment experienced yet another brief rally following the failed breakdown to new correction lows yesterday, but for now, the advance also ran into strong resistance. As trading activity declined substantially ahead of tomorrow’s US holiday, most of the top coins settled down in tight ranges following the recent active and volatile sessions.

We saw a distinct rotation in relative strength over the course of the past 24 hours, since Bitcoin gathered relative strength, while the altcoins that shined yesterday, failed to build on their strength. Even though there is no immediate danger of a broad breakdown, thanks to the bounce, a swing low still hasn’t been confirmed, and downside risks remain high, despite the current stability of the sector.

The coming days will likely be crucial for the fate of the broader-scale rally, and should altcoins show strength again, another rally attempt and the test of the previous swing highs would still be possible here. That said, our trend model remains on sell signals on both time-frames concerning the overwhelming majority of the top coins, with BTC being the closest to a renewed short-term buy signal thanks to its current relative strength.

BTC/USD, 4-Hour Chart Analysis

After briefly topping the crucial $11,300 resistance level, the most valuable coin settled down in its vicinity, and now BTC is trading in a narrow range ahead of Independence Day. The corrective pattern of lower highs and lower lows remains intact in the coin’s market, and now the oversold short-term momentum readings are cleared.

Our trend model remains on sell signals on both timeframes, and even though the bounce in the coin is encouraging, the segment-wide trends and the long-term technicals, caution is still warranted even regarding smaller, short-term trading positions. A sustained recovery above $11,300 still has the potential to revive the uptrend, and in that case, the $13,000 level and the prior swing high are ahead as strong resistance, with support levels now found at $10,000, near $9400, $9200, and at $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum’s bounce has been much weaker compared to BTC’s, and with most of the smaller altcoins also lagging the market leader, the breadth of the move is still suspicious. Bulls are not back in control of the market just yet, and odds still favor a larger scale top now, or in the near future, so downside risks remain very high.

ETH is facing strong initial resistance near $300, and even though the $275 level is safe, for now, our trend model is still on sell signals on both time-frames. While we might be in for a less active period, due to the US holiday, the coming days might still be crucial for ETH and the whole segment, and barring a clear recovery, bears will likely have the upper hand. Further support zones are found near $260, $230, and $200, while resistance above $300 is ahead near $330, and at the prior swing high near $360.

Litecoin and Ripple Still Facing Selling Pressure

LTC/USD, 4-Hour Chart Analysis

Litecoin couldn’t recover above the $125 level, as it failed to build relative strength again despite its encouraging weekend rally attempt. The coin is still well above the $110-$112 support zone, and although the short-term technical pattern is bearish, BTC could jump-start another leg higher in the previously leading coin’s market.

Due to the mounting downside risks, our trend model remains on sell signals on both time-frames, and additionally, the other previously leading coins are also showing weakness. With that in mind, traders should wait for clear signs of technical strength before reentering the coin’s market. Below $110 further support levels are found near $100, between $85 and $90 and near $75, while above $125, resistance is ahead near $140 and $150.

XRP/USD, 4-Hour Chart Analysis

Ripple is still stuck below the $0.40 price level, despite the broad bounce in the segment, and the coin continues to be under clear selling pressure from a broader perspective. XRP would need a strong segment-wide rally to resume the counter-trend move, but even then, traders and investors should stay away from the relatively weak coin.

The coin is also among the weakest majors from a short-term perspective, and while the segment’s stability is a positive sign, the hostile long-term setup will likely lead to a resumption of the bear market in the coming weeks. Initial support is still found near $0.3750, with further zones below that near $0.3550, just above $0.33, and near $0.32, while resistance levels ahead near $0.42, $0.46, and $0.51.

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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.

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.