Crypto Update: Coins Drift Sideways as Bulls Face Stiff Resistance

While the major cryptocurrencies haven’t made much progress since Saturday, they are holding on to most of their recent gains. With no major support levels being broken, the short-term uptrend is clearly intact, even though some of the top coins are sporting overbought momentum readings, making new positions risky here, especially in light of the still bearish long-term outlook for the segment.

That said, the immediate outlook is still positive, and following the late-day pop, a test of the previous highs is possible tomorrow or in the coming days. While several of the majors are still on short-term buy signal due to the recent significant divergences between the top currencies, Bitcoin is now on short-term sell signals in our trend model.

While the most valuable coin has been leading the way higher last week, it’s now clearly in overbought territory with regards to the key short-term momentum indicators, and that casts a shadow on the prospects for the whole segment. The chances of a major top forming during this swing are high, and that warrants caution even concerning the relatively stronger coins.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been once again edging closer to the key $11,300 resistance level today in late trading, despite the overbought momentum readings, and the previous failed attempts. With BTC clearly holding up above $10,000, the short-term uptrend is in no immediate danger, but from a broader perspective, new positions here are risky even regarding the short-term time-frame.

Due to the stretched rally, our trend model is on sell signals on both time-frames, and even though a spike above the prior high is possible here, we expect a major top to form in BTC soon. Above $11,300, the next resistance zone is ahead near $13,300, while support is found near $10,000, $9400, $9200, and $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum only briefly dipped back below the $300 level after forming the weekend swing high, and that could hint at another move towards $330 in the coming days. With that in mind, traders could hold on to their short-term positions, as ETH hasn’t reached significantly overbought momentum readings. Despite that we don’t recommend entering new positions here, due to the unfavorable risk-reward ratio.

Our trend model remains on a neutral short-term signal, while still being a long-term sell signal, and because of the segment-wide picture, odds favor a major reversal in the coming weeks. The next major resistance zone is ahead near $330, while key support zones are still found near $275, $260, $230, and $200.

Litecoin and Ripple Both Struggling With Prior Swing Highs

LTC/USD, 4-Hour Chart Analysis

Litecoin is still stuck below the key $140 resistance level and its prior swing high, despite the recent rally in the segment. Although the short-term uptrend is intact in the market of the previously leading coin, it’s continued weakness warrant caution for bulls. That said, our trend model is still on a short-term buy signal and another swing higher is still possible here, even taking the mounting segment-wide risk into account.

The long-term outlook remains bearish for LTC, and while the coin might still test the $150 level during the current rally, we still expect at least a deep correction in the coming weeks following the lengthy counter-trend move.  Above $150, another strong resistance zone is ahead near $180, with support still found near $125, $110, and $100, and with a strong long-term zone below that between $85 and $90.

XRP/USD, 4-Hour Chart Analysis

While Ripple finally joined the rally on Saturday, spiking above its prior swing high, the coil once again failed to show meaningful bullish follow-through. For now, odds favor yet another failed rally attempt, especially with the still hostile long-term picture in mind. The coin is now trading back below its prior swing high, despite today’s rally, also reinforcing our concerns.

Despite its persistent relative weakness, the coin is still on a short-term buy signal in our trend model, but we continue to urge traders to focus on the stronger coins when considering short-term positions in the segment. Initial resistance is still ahead near $0.51, with another strong zone near $0.54, while support zones are found at $0.46, $0.42, and near $0.3750 and $0.3550.

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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.

Author:
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.