Crypto Update: Coins Find Support As Pullback Continues

The major cryptocurrencies continue to be under short-term selling pressure, as they are working their way through the overbought momentum readings that developed during their recent run-up. The top coins all found support following yesterday’s initial drop and due, in part to today’s U.S. holiday, they entered into relatively narrow trading ranges. On a positive note, no key support levels have been broken, even though some of the majors pushed below their recently formed advancing short-term trend line.

While our trend model remains dominantly on short-term sell signals, the overbought momentum readings are all but cleared, so aggressive traders could already enter new short positions in the leading coins, even though the correction could continue in the coming days. We can’t rule out a full-blown reversal either, and that means that traders should continue to apply strict risk management rules, despite the recent encouraging developments.

BTC/USD, 4-Hour Chart Analysis

BTC spiked briefly lower several times in the past 24 hours, but it managed to get back above $8,600 every time, despite trading below its short-term trendline. The coin is now neutral from a short-term momentum perspective, but for now, traders should remain cautious until we get confirmation of a swing low.

BTC is now on a short-term sell signal and long-term buy signal in our trend model, with support zones found near $8,600, $8,400, $8,200, and $7,800, and with resistance ahead near $9,200, $10,000.

ETH/USD, 4-Hour Chart Analysis

ETH held up above the key long-term $160 level despite yesterday’s scary drop, and it continues to trade in a well-defined short-term uptrend. The coin also cleared the overbought short-term momentum readings, and while further correction is possible, its current stability is a positive sign for bulls.

Our trend model is now on sell signals on both time-frames, with major support zones found near $160, $145, $135, and $130, and with resistance zones ahead between $180 and $185 and near $200.

XRP Tests Trendline As LTC Remains Stable

XRP/USD, 4-Hour Chart Analysis

XRP is still showing relative weakness compared to its closest peers, and best being clearly below its long-term trendline, it also got close to dipping below its advancing short-term trendline. The coin managed to bounce back above the $0.23 support, despite violating it today, and it still has a chance to form a short-term swing low. That said, traders shouldn’t enter new positions here and focus their attention to the relatively stronger coins.

XRP is now on sell signals on both time-frames in our trend model, with support zones found near $0.23, $0.21, $0.20, and $0.1930 and with resistance zones ahead near $0.2475, and $0.26.

LTC/USD, 4-Hour Chart Analysis

LTC also pulled back together with the broader market, but it managed to bounce back above the support/resistance zone near $56. The coin is still showing relative strength, which is a positive sign for the whole segment given the coin’s leading role during the recent rally. LTC is also trading above its previously dominant long-term trendline bit it’s still too early to conclude that the long-term trend shifted.

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

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.

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.