Crypto Update: Coins Bounce Back After Rout but Technicals Remain Bearish
The cryptocurrency segment continues to be dominated by sellers, and even though yesterday’s we saw an oversold bounce, today, the major coins have been under pressure again. The top digital currencies are below the key support levels that have been broken on Tuesday, and the likes of Ethereum, Ripple, a and Litecoin are threatening with another downswing, just holding up above another set of support levels.
Bitcoin, which is still in a much better technical shape than its closest peers, is also facing selling pressure, but despite yesterday’s scare, it remains above its low from July, avoiding a key breakdown, for now. So, while the divergence between the majors is still pronounced, the bearish overall picture is unchanged, and we expect further losses in the coming weeks, even as violent counter-trend rallies are possible.
Our trend model remains on sell singles on both time-frames in the case of the top coins, and since even BTC is likely to dip below its prior swing low, downside risks are high across the board. Bulls would need a quick and decisive rally to consider entering new positions, as the strong support zones that have been broken will now act as resistance, and the short-term downtrends remain strong as well.
BTC/USD, 4-Hour Chart Analysis
Bitcoin continues to show relative strength compared to the major altcoins, and it’s not just holding up above its prior swing low, but it’s also trading above the key $10,000 level in the wake of yesterday’s bounce. While the coming days will be crucial in deciding the fate of the short-term trend, as a move below $9,200 could unleash a violent sell-off, for now, BTC has the best chance to resume the larger-scale rally among the top coins.
Despite its relative strength, the coin is still on sell signals on both time-frames in our trend model, and due to the segment-wide trends, traders should wait for clear signs of technical strength before considering new positions in BTC. Initial support is still found near $10,000, with further zones near $9,200, $8,400, and $8,200, while resistance zones are ahead nea$11,300, $13,000, and at the prior rally high near $14,000.
ETH/USD, 4-Hour Chart Analysis
Ethereum only produced a weak bounce following Tuesday’s plunge, but it managed to get back above the key $180-$185 zone. That said, the $200 level which served as support during the recent consolidation period is well above the current price level and below that, bears are clearly in control of the market. Downside risks remain high here, and a move below $180 seems very likely in the coming days.
The relatively weak coins is still on clear sell signals on both time-frames, and barring a broad rally in the segment, traders should stay away from entering new positions in ETH. Below $180 further support zones are found near $160, and $145, while above $200, resistance levels are now ahead near $230 and $265.
Ripple and Litecoin Cling to Support Levels as Altcoins Remain Weak
XRP/USD, 4-Hour Chart Analysis
While XRP managed to recapture its previous bear market low and the $0.26 support level it’s way below the breakdown level of $0.30 and its prior swing low, leaving the short-term downtrend clearly intact. The relatively weak coin is facing strong selling pressure even after yesterday’s bounce, and while a failed breakdown pattern could still possibly form, all signs point to another leg lower in the ongoing bear market.
XRP is still firmly on sell signals on both time-frames in our trend model, and the coin will likely continue to lead the way lower in the coming weeks, even if sudden sharp counter-trend rallies are also likely. Below $0.26, the next zone of support is found near $0.23, while above the initial $0.28 level, strong resistance zones are also ahead near $0.30, $0.32, and just above $0.33.
LTC/USD, 4-Hour Chart Analysis
Litecoin is also holding up above a key support level but it is also well below the previously dominant $85-$90 trading range, validating the Tuesday breakdown. Despite the BTC-lead rebound, LTC failed to recover a meaningful part of its losses, and the coin looks ready to move below $75 in a sustained fashion, even if a stronger correction is in the cards in the coming period.
Our trend model is still on clear sell signals on both time frames, and with the short-term downtrend being firmly intact, even a counter-trend rally would leave the bearish signals in place. Below $75, further support is still found near $64, with further resistance zones above $90 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.