Crypto Update: Bitcoin Scores Buy Signal as Correction Cortinues

The oversold rally in the cryptocurrency segment continued today, and thanks to another sudden buying spree, most of the majors hit one-week highs. Bitcoin is still the strongest top coin from a technical perspective, but all of the majors joined today’s rally in the quiet weekend environment. Despite the broad bounce, the current move is still likely only a counter-trend bounce, and even as more short-term buy signals might pop up in the coming days, traders should remain defensive here.

ETH topped the $230 level, Litecoin is back above $100, while Ripple managed to recapture the $0.33   price level, but even though some of the steep declining trendlines have been broken, the freshly formed downtrends remain intact, and odds favor the continuation of the move in the coming week. Our trend model remains on sell signals on both cases, despite BTC’s upgrade, and while traders could enter new positions in the most valuable coin, strict risk management rules should be applied in light of the segment-wide trends.

BTC/USD, 4-Hour Chart Analysis

Bitcoin confirmed a short-term swing low with today’s rally, and although a failed break-out is definitely in cards, it also triggered a renewed short-term buy signal, thanks to the coin’s relative strength. The $11,300 level is still ahead as very strong resistance, and while a successful recovery is not impossible, another leg lower is much more likely in the coming period.

Our trend model is still on a long-term sell signal, but traders could open new positions here, even as we would need signs of broad technical strength to support a market-wide recovery. Initial support is found near $10,000 with further levels at $9,400, $9200 and near $8,400, while resistance above $11,300 is ahead near $13,000.

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to tackle the $230 support/resistance level amid the broad bounce in the segment, but even though the coin broke out above the steepest declining trendline, it failed to trigger a renewed buy signal in our trend model. The coin remains relatively weak from a technical standpoint, and traders shouldn’t enter new positions here, even though ETH could extend the rally above the key long-term zone this weekend.

We expect the freshly formed downtrend to resume as the current rally runs out of steam, and the test of the long-term support zone near $180 still looks likely in the coming weeks. With the broad weakness among the smaller altcoins in mind, it’ too early to turn bullish, and the coin faces strong resistance near $260, and $275, while further support below $180 is found near $160.

Ripple Drifts Higher as Litecoin Remains Choppy

XRP/USD, 4-Hour Chart Analysis

Ripple recaptured both the $0.32 and $0.33 levels thanks to the broad rally, but the coin remains in a clearly bearish technical setup. That said, in the wake of the steep losses of the recent weeks, the coin could be in for a larger scale correction, as the short-term momentum indicators are just reaching neutral territory following the bloodbath.

Our trend model remains on clear sell signals on both time-frames, and while the coin could soon test the dominant declining short-term trendline, traders shouldn’t consider entering the market here, as XRP is still the weakest top coin. Above $0.33, the next levels of interest are ahead near $0.3550, and at $0.3750, while support zones are found near $0.30, $0.28, and $0.26.

LTC/USD, 4-Hour Chart Analysis

Litecoin is trying to break out above the $100 level in a decisive fashion, building on its recent relative strength, but so far, the coin failed to show signs of stable bullish follow-through. Despite that, LTC is close to a renewed short-term buy signal in our trend model, but with the segment-wide technical weakness in mind, traders should be prepared to deal with failed breakouts.

Despite the encouraging short-term signs, the coin is still on a long-term sell signal in our trend model, and the current rally still only qualifies as a counter-trend move, even in the case of the relatively strong LTC. Below $100, support is found in the key long-term $85-$90 zone, near $75 and $64, with resistance now 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.

 

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.