Crypto Update: Buy Signals Pop Up as Coins Recover from Friday’s Plunge
Despite Friday’s steep sell-off, the major cryptocurrencies held up well during the weekend, and today, they even managed to recover most of their losses, with several top coins triggering short-term buy signals in our trend model. After the overbought short-term momentum readings were cleared, the majors surged higher today in early trading, and although we haven’t seen signs of significant bullish follow-through, with the confirmed swing lows, the immediate outlook turned bullish in most cases.
That said, the bearish long-term pressures combined with the lengthy counter-trend rally still create a risky environment for bulls, and trades should only consider small, speculative positions here, while applying strict risk management rules. Odds continue to favor a broad and steep decline in the coming weeks, even as most of the short-term uptrends remain intact in the segment, and the bullish short-term momentum could still carry the coins higher.
The fact that Bitcoin regained its relative strength, getting close to its recent swing high today is a plus for bulls concerning the coming days. Until Bitcoin remains strong, the other short-term leaders such as Etherereum, Dash, and EOS could continue to shine, but the currently lagging coins like Litecoin and Monero should be avoided due to the downside risks.
BTC/USD, 4-Hour Chart Analysis
Bitcoin’s somewhat surprising quick recovery restored the bullish short-term trend in the most valuable coin’s market following the plunge below the previously dominant steep uptrend. With today’s spike higher, BTC recaptured the $7600 level, triggering a short-term buy signal while propelling the smaller coins higher as well.
Until BTC respects Friday’s swing low near $7000 (not the spike low near $6250), the short-term uptrend remains intact, despite the bearish long-term setup, but the downside risks are still very high, and a move below structurally important $5850 is still likely in the coming weeks, even in the case of another swing higher. Further support is found near $6750, $6500, $6100, and $6000, while the recent swing while resistance is ahead near $8400, $9000, and $9200.
ETH/USD, 4-Hour Chart Analysis
Ethereum continues to show relative strength, which together with BTC’s strength might be enough to extend the rally in the coming days. ETH continues to trade in a steep short-term uptrend and as the coin cleared the overbought momentum readings and recovered above $250, it’s now on a short-term buy signal in our trend model.
The coin is still in a hostile long-term technical position, and although the short-term momentum could still carry it higher, the risk of a steep and durable sell-off is high in the coming weeks. Ethereum is currently trading just below the $260 resistance, with further levels ahead at $275, $300, and, $330, while support is found near $230, $200, and $180.
Ripple Recaptures $0.40, as Litecoin Remains Stable
XRP/USD, 4-Hour Chart Analysis
Ripple has been the most volatile major this week, first surging by 50% up to $0.48, and quickly shedding one-third of its value to bottom out near $0.36 on Friday. Now the coin is back above the $0.40 level, eyeing the lower boundary of the crucial long-term zone between $0.42 and $0.46.
Thanks to the rebound, the coin is back on a short-term buy signal, and due to its long-term relative weakness, traders should focus on the relatively stronger coins, even though the volatility in XRP is tempting for short-term positions. Above the long-term zone, further resistance is ahead near $0.51 and $0.54, while support below $0.40 is found near $0.3750 and $0.3550.
LTC/USD, 4-Hour Chart Analysis
Litecoin managed to hold up above the $85 level despite its recent relative weakness, and although the bounce wasn’t enough to trigger a buy signal in our trend model yet, a move above $98 would be enough for an upgrade, in light of the segment-wide recovery. Should the coin score a new swing high, it could test the $125 resistance in the coming days, but the long-term outlook remains negative for the LTC.
Our trend model remains on a long-term sell signal too, despite the lengthy counter-trend rally, and downside risks are very high following the parabolic moves in the top coins. Initial support is found near $90, and below $85, further levels are found between $72.50 and $75, while above the previous swing high, the next level is resistance is ahead near $110.
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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.