Crypto Update: Bounce Fails Again as Bearish Forces Remain Dominant

While yesterday’s there was a chance for a short-term reversal in the cryptocurrency segment, due to the weakening bearish momentum and an encouraging bounce in some of the majors, the rally failed, and a lot of top coins hit new lows afterward. Our trend model remains on sell signals in most cases, and although the top 3 coins are holding up above their weekend lows, the short-term downtrend is clearly intact, while the declining long-term trends are not in any danger.

That said, a stronger bounce or at least a volatile consolidation phase is still likely in the coming period, given the deeply oversold momentum reading and the negative sentiment. Traders and investors should remain defensive even in the case of the relatively stronger coins, and long positions should still only be considered as ultra-short-term trades with strict risk management until at least a confirmed short-term trend change.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is trading just above $3600 support level despite the failure of the bounce, and it is still clear of the weekend low, even as the declining short-term trend remains intact. The coin is still deeply oversold from a short-term perspective, but our trend model remains on sell signals on both time-frames.

BTC is facing strong resistance in the $4000-$4050 zone, with further resistance levels ahead near $4450, and between $5000 and $5100, while crucial long-term support is found near $3000, and traders should only consider entering ultra-short-term positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been testing its weekend lows today in early trading, and the coin is stuck well below the prior low near $120, clearly being on a short-term sell signal in our trend model, while being in strong negative long-term trend as well.

That said, a recovery above $120 could signal a more significant bounce after the recent rout, but for now, traders and investors should still avoid ne positions in the third largest coin. Primary support is still found in the $95-$100 zone, with further resistance ahead near $130.

Litecoin Shows Stability but Altcoins Remain Weak Across the Board

XRP/USDT, 4-Hour Chart Analysis

The damaging bear market continues in the majority of altcoins, and even the previously stronger Ripple and Stellar are suffering under the clear selling pressure. Ripple is still in a clear short-term downtrend and on a sell signal in our trend model, and it plunged back below both the $0.355 and $0.375 resistance levels, while being stuck well below the key long-term $0.42-$0.46 zone.

The neutral long-term trend signal is unchanged with XRP trading above its prior bear market lows, but traders and investors still shouldn’t enter new positions, with support levels found at $0.32 and $0.30.

Litecoin/USD, 4-Hour Chart Analysis

LTC has been relatively strong in the past few days and it is trading close to its recent lows despite the failure of yesterday’s bounce, and the weekend low is not in danger currently.  The coin is on a neutral short-term trend signal thanks to its relative stability but given the bearish segment-wide trends and the negative long-term setup, traders should only enter ultra-short-term trades in the coin. Strong resistance is still ahead at $34.50 and $38, while primary support now found near $26.

EOS/USDT, 4-Hour Chart Analysis

EOS is showing relative weakness compared to the broader market, and it failed to recover above the key $3.50 level during the recent, failed bounce. Given its bearish bias, traders and investors should stay away from the coin, with our trend model being on sells signal son both time-frames, and with meaningful support only found near $2.45 and between $2 and $2.05.

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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.