Crypto Update: Bitcoin Leads Bounce but Altcoins Remain Weak

The major cryptocurrencies are all in the green after the US close thanks to today’s oversold bounce, which was led by the relatively strong Bitcoin. Despite the rally, the major altcoins are all below their recent short-term lows, and the pattern of lower lows and lower highs I clearly intact in their markets, leaving only BTC in a neutral short-term pattern.

While the bounce came in time to save Ripple, Ethereum, and Litecoin from breaking below key long-term support levels near $0.30, $200, and $85 respectively, their weakness remains clear from a broader perspective. The bearish conditions are apparent among the smaller altcoins as well, and with still only Monero showing meaningful strength, the outlook for the segment remains bleak, even though Bitcoin could resume its uptrend, should it hold up above its prior swing low.

For now, the majors are on sell signals on both time-frames in our trend model, and even though the current bounce could continue, as the short-term momentum indicators are still oversold, downside risks remain prominent. Until we see broader signs of strength, traders should remain defensive even towards the relatively stronger coins.

BTC/USD, 4-Hour Chart Analysis

Bitcoin managed to hold up above $10,000 despite yesterday’s steep sell-off and although the most valuable coin is still stuck below the $11.300 support/resistance level, it continues to vastly outperform its largest peers. The coming days will be crucial for the mid-term outlook for the coin, and should it manage to keep its relative strength, even a renewed short-term signal could be ahead for BTC.

That said, alone, BTC is unlikely to sustain a durable move higher, and should the segment-wide selling pressures remain as this strong, the coin will likely catch up with the top altcoins on the downside. Our trend model is still on sell signals on both time-frames, with support levels below $10,00 found near $9400, $9200, and $8400, and with resistance above $11,300 ahead near $13,000.

 ETH/USD, 4-Hour Chart Analysis

Following yesterday’s chaotic session and its flash crash, Ethereum spiraled below $230 again, but it managed to bounce back before violating the $200 support level despite the strong momentum of the plunge. Now, the coin is back near the $230 level yet again, but even the steepest short-term downtrend line remains intact, and the outlook for the coming weeks remains negative.

The relatively weak ETH could continue its corrective rally, as the short-term momentum indicators are still deeply oversold, but traders and investors shouldn’t enter new positions here, barring a broad recovery in the segment. Our trend model is on clear sell signals on both time-frames, with support levels below $200 found near $180 and $160 and with resistance levels still ahead near $260, $275, and $300.

Ethereum Tries to Hold $230 After Flash Crash as LTC Slips Below $90

XRP/USD, 4-Hour Chart Analysis

While XRP held up well during yesterday’s plunge, at least percentage-wise, it remains very weak from a technical perspective, and it couldn’t distance itself from the key long-term $0.30 support level. The coin is still under apparent selling pressure, and a dip below the support zone towards the prior bear market lows is still very likely in the coming weeks, even as the current oversold bounce could still continue and could evolve into a larger-scale correction.

That said, our trend model remains on sell signals on both time-frames, even in the case of a broader recovery, traders should avoid Ripple and focus on the relatively stronger coins as the bear market will likely resume. Below $0.30, further support levels are found near $0.28 and $0.26, while resistance is still ahead near $0.3200, $0.33, $0.3550, and $0.3750.

LTC/USD, 4-Hour Chart Analysis

Litecoin only managed a weak bounce despite BTC’s strength and the fact that it held up above the lower end of the $85-$90 support zone yesterday. The previously leading coin continues to be weak together with the other altcoins that spearheaded the rally, and that points to the continuation of the freshly formed short-term downtrend as soon as the oversold bounce runs its course.

Our trend model is still on clear sell signals on both time-frames, and while a broader rally is still possible in the coming days, traders shouldn’t enter new positions until the short-term downtrend is intact. Below the initial $85-$90 zone, further zones are found near $75 and $64, while resistance above the initial zone near $100 is ahead between $110 and $112, and near $125 and $140.

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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.