Crypto Update: Coins Bounce Back but Bear Trap Not Yet Confirmed

The cryptocurrency segment is finally showing early signs of strength following the weekend’s selloff that took most of the majors to new bear market lows. Compared to the steep declines of the past couple of weeks, the bearish momentum has been relatively weak, and some of the top coins managed to climb back to, or above their prior lows.

Even though the market is still overwhelmingly bearish from a long-term perspective, a broad move above previous lows would confirm a short-term bear trap pattern that could be the base of a stronger bounce, especially in the most oversold coins.

The short-term picture is clearly oversold in the segment, and given the horrible sentiment, at least a consolidation phase is very likely in the ongoing bear market. That said, long positions should still only be considered as short-term or ultra-short-term positions with strict risk-management, at least until a confirmed short-term trend change.

BTC/USD, 4-Hour Chart Analysis

Bitcoin briefly recovered above the $4000 following yesterday’s strong bounce, and it continues to trade well clear of its low and the $3600 support as well. While the rally is encouraging from a short-term perspective, a clear move above the $4000-$4050 zone would be needed to confirm the possible bear-trap formation.

For now, BTC is still on sell signals on both time-frames in our trend model, with the declining trends clearly being intact both short- and long-term. Further resistance levels above $4050 are ahead near $4450, and between $5000 and $5100, while crucial long-term support is found near $3000.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also stuck below its prior bear market low near $120 despite the bounce, but it’s also deeply oversold from a short-term perspective with the bearish momentum clearly weakening. While ETH remains on sell signals on both time-frames, a stronger rally remains likely in the coming week, even as a short-term trend change is far away from a technical perspective.

Traders should still only consider ultra-short-term positions her, with primary support still found in the $95-$100 zone and with further resistance ahead near $130.

Litecoin Recaptures $30 Level as Ripple Joins Bounce

XRP/USDT, 4-Hour Chart Analysis

While Ripple lost its relative strength in recent days, at least on the short-term time-frame, the coin managed to hold up well above its prior bear market low. XRP also bounced back together with the broader market and climbed back above the $0.355 and $0.375 resistance levels, although it remained well below the key long-term $0.42-$0.46 zone.

While the long-term trend single is still neutral, the bounce wasn’t enough for an upgrade with regards to the short-term time-frame, and traders and investors still shouldn’t enter new positions, with support levels now found at $0.32, and $0.30.

Litecoin/USD, 4-Hour Chart Analysis

LTC is trading right at its previous lows near the $30 level, showing signs of relative strength, so far today, but that wasn’t enough to trigger a short-term buy signal. The declining short-term trend is clearly intact, and the coin needs to hold above the lows to confirm its early strength. Strong resistance is ahead at $34.50 and $38, while yesterday’s low is found near $26.

XMR/USDT, 4-Hour Chart Analysis

The other leaders of the bear market are still weak, with ETC, Dash, Neo, IOTA, and Monero all being stuck below their recent lows. As there is still no sign of a developing bullish leadership, the negative long-term trend is still looking strong, and investors should remain defensive despite the likely short-term rally.

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.