Crypto Update: Bitcoin and Litecoin Continue Rally as the Broader Market Remains Weak
The major cryptocurrencies had a mixed day following yesterday’s rally in the segment, and the divergence between Bitcoin, Litecoin and the rest of the market even got stronger. Today’s announcement by U.S. President Donald Trump regarding a new set of trade tariffs on Chinese goods and services boosted the rally, but it didn’t help the struggling altcoins. Even though the trade war, which has been one of the catalysts behind BTC’s rally this year, seemed contained with the resumption of the high-level talks, today’s developments mean that we could be in for a longer skirmish between the two superpowers.
Should the re-escalation continue, the major coins, and especially BTC could resume the larger scale rally, in the face of the bearish technicals but, for now, the outlook for the segment is little changed, as no major technical barriers have been broken. That said, BTC managed to climb back above $10,000, and even though that wasn’t enough to trigger a renewed buy signal in our trend model, the most valuable coin is now close to an upgrade.
On a negative note, the broad weakness among altcoins persist and while LTC continues to track BTC higher, the likes of ETH and XRP are still severely lagging behind, which casts a shadow on the rally attempt. Our trend model remains on sell signals on both time-frames, and barring a concerted move higher, traders should only consider short-term positions in the strongest coins, as downside risks remain very high here.
BTC/USD, 4-Hour Chart Analysis
After taking out the most prominent declining short-term trendline yesterday, BTC moved clearly above the $10,000 level and it continues to hold up it despite the broad weakness among the smaller coins. Bitcoin is still well below the key $11,300 support/resistance level, but should it form a short-term swing low, a renewed short-term buy signal could soon be triggered in our trend model.
In spite of the recent period of relative weakness, the coin remains in a better technical position compared to its closest peers, and bulls still can hope that the larger-scale rally will resume. While the current rally is encouraging, our trend model is still on sell signals on both time-frames, and odds continue to favor another leg lower, below the $9,200 level. Below that, key zones are found near $8,400, $8,200, and between $7,600 and $7,800, with resistance zones are now ahead near $11,300 and $13,000.
ETH/USD, 4-Hour Chart Analysis
While BTC kept pushing higher, Ethereum only slightly gained ground today, confirming its relative weakness, and even the initial resistance level near $230 seems too far for bulls here. The coin is still trading in a bearish consolidation pattern and a move below $200 remains the most likely outcome for the coming weeks, despite the current drift higher. The weakness among the smaller altcoins backs up the bearish scenario as well, and traders should still avoid entering new positions here.
Our trend model remains on sell signals on both time-frames, and even though a broad recovery rally is not out of the question, the segment-wide trends make such a scenario unlikely. So, while a key technical breakdown has been avoided, downside risks remain apparent. Below $200 further support levels zones found near $180, and $160, while resistance levels ahead near $260 and $275.
Litecoin Tests $100 as Ripple Remains Under Pressure
XRP/USD, 4-Hour Chart Analysis
Ripple remains hopelessly weak from a technical standpoint, especially considering the failed spikes higher during the recent weeks, and the consolidation pattern in the coin’s market continues to look bearish. XRP is stuck below the $0.32 price level, despite today rally in BTC and LTC, and it is still very far from the initial correction high near $0.34. Below that, traders shouldn’t consider even short-term positions in the relatively weak coin, as the bear market will likely resume soon.
Our trend model is still firmly on sell signals on both time-frames, and we continue to expect a dip below $0.30 in the coming weeks, although a broad recovery could still prop XRP up. Below $0.30, XRP strong support is found near $0.28 and $0.26, with further resistance zones also ahead near $0.3550 and $0.3750.
LTC/USD, 4-Hour Chart Analysis
Litecoin has been testing the $100 level today, thanks to the BTC-led rally attempt, and while it is still one of the strongest coins from a technical perspective, it failed to sustainably recapture the key level. The coin is also trying to break out above a strong declining short-term trendline, but the momentum of today’s move was too weak for that.
While LTC is in a safe distance from the key $85-$90 support zone, it remains on sell signals on both time-frames, even as a renewed short-term buy signal is in the cards in the coming days. Odds still favor a failed rally attempt, with further support zones found near $75 and $64, and with resistance zones ahead between $110 and $112 and near $125.
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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.