Crypto Update: Coins Plunge as Short-Term Trendlines Fall

As we warned in recent days, the counter-trend rally in the cryptocurrency segment has been running out of steam, and the waning momentum together with the still overwhelmingly bearish long-term pressures led to steep drop today, which dragged all of the majors significantly lower. The move, which caused trendline breaks in most of the top coins was accompanied by a surge in trading volumes, while correlations between the majors also spiked higher, confirming the validity of the breakdowns.

After the recent downgrades in our trend model, the short-term outlook deteriorated further today, and traders and investors should remain defensive here, with all of the majors still being on sell signals with regards to the long-term time-frame. A test of the bear market lows still seems likely in the coming months, even if a larger scale bottoming process might already have started in the segment.

ETH/USD, 4-Hour Chart Analysis

The most important leader of the rally, Ethereum clearly broke below its dominant short-term trendline, and the $145 support level. ETH quickly fell back to the first major support zone near the $130 price level, and now the coin is on sell signals on both time-frames in our trend model.

Traders should still stay away from entering new positions here, until we see renewed signs of strength, as bearish risks remain high in light of the long-term setup. Further support zones are still found near $120, and between $95 and $100, while resistance is ahead at $160 and near $180.

BTC/USD, 4-Hour Chart Analysis

Bitcoin broke below the key $4000-$4050 resistance zone, warranting a downgrade to neutral in our trend model, but for now, the coin remains clearly above the $3600 support. Given the coin’s technical weakness and the broad breakdown in the segment, even short-term traders should stay away from entering new positions here, while the long-term setup remains clearly bearish.

The oversold long-term momentum readings are now cleared, thanks to the counter-trend rally and we need to see strong evidence of technical strength before re-entering the market. Further resistance is now ahead near $3850, and at $4450 while support below the $3600 level is found near $3250 and $3000.

Altcoins Hammered Amid Broad Sell-Off

LTC/USD, 4-Hour Chart Analysis

Litecoin is trading near the $34.50 support level following the sell-off and with the dominant rising trendline being just below the current price level, the coin’s outlook remains shaky. While Litecoin was leading the way higher during the counter-trend move, it remains in a steep long-term downtrend and traders and investors should stay away from entering new positions here. Further support is found between $30 and $30.50 and near $26, with strong resistance zones ahead near $38 and $44.

XRP/USDT, 4-Hour Chart Analysis

The technical position of Ripple deteriorated further and the coin is now eyeing the test of the $0.32 level after breaking below the $0.3550 support end triggering a short-term sell signal. The long-term picture is also bearish and traders and investors shouldn’t enter positions in the relatively weak XRP. Resistance is ahead above $0.3550 near $0.3750 and in the key long-term zone between $0.42 and $0.46 being with further support found near $0.30 and $0.26.

EOS/USD, 4-Hour Chart Analysis

EOS followed the broader market lower and broke out of the long-standing consolidation pattern that has been dominated trading in recent weeks. The coin triggered a short-term sell signal with the move and we expect the broader downtrend to continue, with support levels now found near $2.35 and just above $2 and with resistance ahead near $2.50, $2.675, and $3.

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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.