Crypto Update: Coins at Make-Or-Break Levels as Sell-Off Continues

The major cryptocurrencies are at a very important short-term juncture following two days of selling pressure, as the likes of Bitcoin, Ethereum, and Litecoin are near the key support levels that we pointed out yesterday. Some of the majors already broke below important levels, and following yesterday’s downgrades, which affected EOS, IOTA, and NEO, all of the top coins are now on short-term sell signals in our trend model.

The pattern of higher highs and higher lows has been broken in most cases, and in light of the bearish long-term pressures, downside risks remain very high, even though a quick recovery could still save the counter-trend rally. For now, traders should be defensive due to the heightened risks, and even in the case of a rebound, only small short-term positions should be considered, while using strict risk management rules.

The coming days will be crucial for the whole segment, as a clear break below the key support zones could accelerate the sell-off, creating a buying vacuum that could lead to a volatile and steep drop across the board.

BTC/USD, 4-Hour Chart Analysis

Bitcoin already dipped briefly below $7600 today, after confirming a lower swing low following yesterday’s late-day trendline break, but a sustained breakdown has been avoided for now. That said, as the pattern of higher highs and higher lows is now broken, and barring a quick recovery above $8000, traders should avoid entering new positions in the most valuable coins due to the downside risks and the weakness of the previously leading coins.

The key $7600-$7800 support zone is now in the center of attention and a sustained dip below that could lead to a quick test of the next major zone near $7000. While below that there are further zones near $6750 and $6500, it seems unlikely that the coin would avoid a test of the structurally important $5850 level in the case of a failure at $7000. Should bulls manage to hold their ground here, further short-term resistance is ahead near $$8200 and $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum already got close to the key $230 support today in late trading, but the coin is holding up above that level despite dropping below last Friday’s swing low. The move triggered a short-term sell signal in our trend model, but for now, the counter-trend move still has a chance of resuming in spite of the mounting long-term risks.

That said, barring a sustained move above $250, caution is warranted for bulls, and the coming days could see an accelerated sell-off in the case of a durable drop below $230. The next support zone is found near $200, with another strong long-term zone at $180, while resistance is ahead near $260 and $275, with the long-term picture still being clearly bearish in ETH’s market.

Ripple Falls Below $0.40 as Litecoin Tests $100 Again

XRP/USD, 4-Hour Chart Analysis

Ripple declined together with the broader market following the early day bounce, and the coin fell below the $0.40 level but remained well clear of the key $0.3750 support, despite the spike segment-wide spike lower. That said, XRP is now clearly below the previously dominant rising short-term trendline, and in light of the hostile long-term picture, traders should remain defensive here.

Ripple is still on sell signals on both time-frames in our trend model, and we continue to expect a move below both the $0.3750 and $0.3550 support levels in the coming weeks, towards the key $0.30 price level. In the case of recovery, resistance is now ahead near $0.42 and $0.46, and a move above the prior swing high could still lead to a test of the $0.51 resistance.

LTC/USD, 4-Hour Chart Analysis

Litecoin has been testing the $100 today after dipping below the short-term support level near $110 yesterday, but despite a brief spike below the key support, the coin remains stable. Despite that fact, our trend model is now on a short-term trend signal concerning LTC, and due to the heightened downside risks, traders should only enter the market in the case of a confirmed swing low.

Below $100 the crucial long-term zone between $85 and $90 provides support for LTC, but below that zone, things could turn ugly quickly. On the other hand, even though the long-term setup remains bearish, should LItecoin hold its ground near $100, the whole segment could get a boost, given the coins leading role in the counter-trend move. Further resistance is ahead near the recent swing high and $125, while above that strong levels are found at $140 ad $150.

Featured image from Shutterstock

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.