Crypto Update: Coins Hit Multi-Week Lows As Narrow Bounce Fades

The major cryptocurrencies gave back their recent bounce yesterday following the U.S. close due to a sudden burst of selling. The preceding rally was weak in most cases, with only the leader of the previous weeks, ETH getting close to its prior swing high. The weak breadth of the move led to significant divergences, and, in turn, to the second leg of the correction. The segment is still controlled by bulls from a broader perspective, but as sentiment reached extremely positive levels a more sustained correction is likely

Our trend model continues to be bearish with regards to the short-term time-frame, with even ETH being back on a sell signal. While the long-term outlook is still positive, traders shouldn’t enter new positions here, but long-term investors could add to their holdings on the short-term pullbacks, as the freshly formed uptrends remain safe.

BTC/USD, 4-Hour Chart Analysis

BTC spiked below its correction low yesterday in late trading and while it remains above the $9,200 support level, it is clearly south of the previous short-term trend channel. With that, the corrective pattern remains intact and while the momentum indicators are neutral, the correction will likely continue.

BTC is 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 failed to test the $300 level before turning lower yesterday following the U.S. session, and the coin likely formed a double-top pattern, warning of a deeper correction, especially given the broad weakness in the segment. That said, the long-term trend shift seems safe, for now, and we expect the rally to resume after the overly bullish sentiment is reset.

Our trend model is once again on a short-term sell signal while being on a long-term buy signal, with major support zones found near $230, and $200, and between $180 and $185, and with resistance zones ahead near $260, $275, $290, and $300.

XRP And LTC Resume Correction

XRP/USD, 4-Hour Chart Analysis

XRP remains under strong selling pressure and after only a managing a weak bounce, it’s already trading below its prior correction low. The coin is getting close to the key $0.26 level yet again, and it is dangerously close to its previously dominant declining long-term trendline. Traders should still stay away from entering new positions here, and investors should also focus on the relatively stronger coins.

Our trend model is on a short-term sell signal while still being on a long-term buy signal with support zones found near $0.26, $0.2475, and $0.23, and with resistance zones ahead near $0.28, $0.30 $0.32, $0.33, and $0.3550.

LTC/USD, 4-Hour Chart Analysis

LTC also got hit hard in the past 24 hours testing its prior swing low and dipping back below the key $72.50-$75 support/resistance zone. We still expect the coin to endure a deeper correction with a possible test of the $64 support level in the wake of the lofty gains of the past weeks. The freshly formed long-term uptrend is safe, for now, and coin could be among the first majors to form a sustained swing low.

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 $64, $56, and $51, and with resistance zones ahead between $72.50 and $75, and 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.