Crypto Update: Coins Extend Correction But Technicals Remain Bearish

The cryptocurrency segment experienced a second wave of post-crash buying yesterday, with the majors all topping their weekend correction highs. BTC and XRP built up relative strength during the move after leading the way lower for weeks, but technicals are little changed despite the rally. The bearish long-term setups are intact in the market, and even the short-term downtrends remain dominant, although some of the top coins have been testing their steeply declining short-term trendlines.

As the majors remain below or near their recent breakdown levels, downside risks remain high, especially since the short-term momentum indicators are now in neutral territory in the wake of the correction. That said, the counter-trend move could still continue, but the downtrend is more and more likely to resume in the segment.

BTC/USD, 4-Hour Chart Analysis

BTC rallied well above its weekend high yesterday, giving a boost to the smaller coins as well, while briefly topping the lower boundary of the key long-term support zone between $7,600 and $7,8000. The coin cleared the oversold momentum readings, but the coin is still trading below its steeply declining short-term trendline, despite the fact that it recovered above its October low. The outlook remains negative for BTC and traders should still enter new positions.

The coin is still on sell signals on both time-frames in our trend model, with support zones now found near $7,400, $7,000, $6,750, and $6500, and with resistance ahead near $7,600, $7,800, and $8,200.

ETH/USD, 4-Hour Chart Analysis

ETH continues to show weakness compared to BTC, getting stuck below its October low and its damaging short-term trendline. The coin is also way below the crucial $160 level, and as it’s trading right at its weekend high, it’s more vulnerable to another technical breakdown even though the recent swing low is in no immediate danger.

Our trend model remains on sell signals on both time-frames, with support zones found near $145 and $130, and with resistance zones ahead near $160, between $180 and $185, and near $200.

XRP Touches $0.23 While Litecoin Shows Weakness

XRP/USD, 4-Hour Chart Analysis

XRP topped its weekend high yesterday, tracking the rally in BTC and reaching the crucial long-term zone near $0.23. The coin is still stuck below that zone and its steeply declining short-term trendline, but given the extent of its recent plunge, a more sustained bounce is in the cards in the coming days. Despite that, we expect the bear market to continue after the correction runs its course, so downside risks remain high here.

XRP is still on sell signals on both time-frames in our trend model, with support zones found near $0.21 and $0.20, and with resistance zones ahead near $0.23, $0.2475, $0.26, and $0.28.

LTC/USD, 4-Hour Chart Analysis

After showing relative stability following the crash, LTC lots its mojo in the past 24 hours, which hints at the continuation of the coin’s bear market. LTC is trading just above its recent very narrow trading range, and while its recent swing low below $44 is safe, the coin is still stuck below its October low, so traders should remain defensive.

LTC remains on sell signals on both time-frames in our trend model, with support zones now found near $44 and $38, and with resistance zones ahead near $51, $56, and $64.

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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.