Crypto Update: Bitcoin Triggers Buy Signal but Momentum is Suspicious

The cryptocurrency segment had another relatively quiet day, with no meaningful change in technical setups, as far as the majors are concerned. The recently leading Litecoin continued its short-term correction, while the top coins traded in narrow ranges yet again, still with a slight bullish bias. On a negative note, Ethereum failed to gain momentum despite its renewed buy signal in our trend model that got triggered yesterday.

The same can be said about Bitcoin, even though BTC only triggered a buy signal today, after sustainably recapturing the $8200 resistance levels.  Looking lower on the capitalization list, the picture continues to be mixed, and although even the currently weaker coins remained stable we don’t see signs of a broad rally in the segment.

That said, the immediate outlook leans positive thanks to the stability of the majors, but with the bearish long-term technicals in mind, caution is still warranted even regarding short-term trading positions.

LTC/USD, 4-Hour Chart Analysis

LTC remains under short-term selling pressure, as expected following the spike above the $140 resistance level, and the coins got close to testing the $125 support level today in late trading. The short-term momentum indicators are still in overbought territory, and that points to further consolidation even in the case of another leg higher, so traders still shouldn’t enter new positions here.

Should the coin form another swing low, traders should still only consider smaller positions even in LTC, as the long-term outlook remains negative in the segment. Our trend model is on a neutral short-term signal while being on a long-term sell-signal, with key resistance levels ahead near $140 and $150 and with support below $125 found near $110, $110, and between $85 and $90.

BTC/USD, 4-Hour Chart Analysis

Bitcoin successfully tacked the initial resistance level near $8200, triggering a renewed short-term buy signal in our trend model, but as the momentum of the move has been weak, the coming days could still see a sharp reversal in the coin’s market. That said, BTC is safely above last week’s lows, and the broader counter-trend move could still continue, so traders could still enter smaller short-term positions here.

Despite the current market-wide stability, strict risk management rules should still be applied, as downside risks remain high from a broader perspective. In case of a dip below the key $7600-$7800 support zone, the next level of interest is found near $7000, and we still expect the coin to revisit the structurally important $5850 level in the near future. Further support zones are found near $6750 and $6500, while resistance is now ahead near $8400, and $9000 and $9200.

Ethereum and Ripple Go Nowhere as Momentum Fades

ETH/USD, 4-Hour Chart Analysis

Although Ethereum slowly built up relative strength this week, triggering a buy signal in our trend model yesterday, the coin failed to meaningfully extend its rally above $260 today. As the already weak momentum of the move seems to be fading, bulls could be in trouble again in the coming days, even though above $230, the counter-trend move is still alive.

That said, given the lengthy spring rally, downside risks are high here, and the bearish long-term trend is still likely to resume soon. Our trend model is still on a short-term buy signal, while being on a bearish long-term signal, and a move above $275 could still trigger a test of the $300 and $330 resistance levels. In the case of a reversal further support is found near $200, with a key long-term zone below that near the $180 level.

XRP/USD, 4-Hour Chart Analysis

Ripple failed to sustainably recapture the $0.40 level despite the supportive trends in the segment, and this relative weakness once again confirmed the selling pressure on the coin. XRP continues to trade in a narrow short-term range, well above last week’s lows, but given its weak momentum, it remains on sell signals on both time-frames in our trend model following today’s flat session.

While another spike higher in the coin’s market is possible, especially of the segment remains bullish on the short-term time-frame, we still don’t expect a sustained rally. Odds continue to favor a move towards the $0.30 level in the coming weeks, with initial support still found near $0.3750, and with further levels near $0.3550, just above $0.33, and near $0.32. In the case of a recovery resistance above $0.42 is ahead near $0.46, with the next level of interest found near $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.