Crypto Update: Coins Enter Correction Following Spectacular Rally

The major cryptocurrencies turned lower today in a concerted fashion as the altcoins reached its euphoric phase yesterday, leading to severely overbought short-term momentum readings in most cases. All eyes were on ETH, the undisputed leader of the rally, and the second-largest coin got close to the $290 resistance before selling off, likely forming a more sustained top, as we expected. The short-term uptrends are still intact in the segment but in light of the extent of the recent rally, we expect a deeper correction to reset the overly bullish sentiment.

After the series of downgrades yesterday, our trend model turned even more negative due to today’s developments, and several overbought coins go downgraded to sell. That said, the long-term trend change seems safe in most cases, and traders should be looking for entry points as the correction runs its course and the overbought momentum readings get cleared.

BTC/USD, 4-Hour Chart Analysis

After showing relative weakness for an extended period, BTC turned lower together with the broader market today, dipping below the key $10,000 level again, and getting close to the rising short-term trendline. The coin is not overbought according to the short-term momentum readings, but the segment-wide correction could lead to a deeper correction, even as we expect BTC to outperform during the pullback.

BTC is now on a short-term sell signal while still being on a long-term buy signal in our trend model, with support zones now found near $9,200, $8,600, and $8,400, and with resistance ahead near $10,000, $11,300, and $13,000.

ETH/USD, 4-Hour Chart Analysis

ETH has been experiencing very heavy trading in the latter phase of the rally and volatility spiked higher today as the market-leading coin pulled back. The coin is still well above the rising short-term trendline, and the rally could still resume but short-term risks are very high here.  The concerted nature of today’s dip and the severely overbought momentum readings all point to a deeper pullback here.

Our trend model is now on a short-term sell signal while still being on a long-term buy signal, with major support zones found near $260, $230, and $200, and with resistance zones ahead near $275, $290, and $300.

XRP Sees Wild Swings As LTC Follows Market Lower

XRP/USD, 4-Hour Chart Analysis

After turning volatile near $0.33 XRP scored a marginal new high, dragged higher by ETH, but it quickly reversed its gains as it turned lower in heavy trading. The coin is still above its rising short-term trendline, but even though the rally could resume, the recent price action makes a deeper and even more volatile correction likely.

Our trend model is now on a short-term sell signal while still being on a long-term buy signal with support zones found near $0.30, $0.28, and $0.26, and with resistance zones ahead near $0.32, $0.33, and $0.3550.

LTC/USD, 4-Hour Chart Analysis

LTC already broke below its short-term trendline after getting stuck below $85 and turning south together with its closest peers. The coin is still safely above its previously dominant long-term trendline, and we expect the freshly formed uptrend to resume after the current pullback, but LTC could be in for a volatile period.

LTC is now on a short-term sell signal while still being on a long-term buy signal in our trend model, with support zones now found near $75, $72.50, $64, $56, and $51, and with resistance zones ahead near $85 and $90.

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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.