Crypto Update: Coins Pull Back as Follow-Through Rally Fades

The cryptocurrency segment has been consolidating Friday’s Litecoin-led surge over the weekend, and although most of the major coins are holding on to the bulk of their gains, the follow-through move has been lacking momentum. That said, compared to the failed Ripple-led attempt two weeks ago, more coins are showing positive signs, and despite the pullback, several of the majors remain on short-term buy signals in our trend model, even as long-term techncials are still overwhelmingly bearish.

With that in mind, traders could enter short-term positions in the relatively stronger coins, but strict risk management rules should still be applied as there is no evidence that the bear market is over, and from a broader perspective, at least the test of the prior lows is still likely.

Also, while Ethereum has been performed relatively well since recapturing the $112 level during the surge, the top 3 coins continue to be suspiciously, and until we see further resistance levels break, the “one-day-wonder” scenario remains a possibility.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin rallied briefly above the $3600 level that was in the center of attention for weeks in January, it failed to extend its rally during the failed Monday move, and the lack of bullish momentum is a negative sign for the whole segment. Despite the weakness, the short-term rally is intact from a technical perspective, but traders should remain cautious with BTC as the coin might form a failed break-out pattern, which could lead to a quick move below its prior trading range.

The coin remains on a clear long-term sell signal in our trend model, and although the short-term buy signal is also intact, traders should only enter small, speculative positions here, with the bearish long-term forces still being apparent. Strong resistance is ahead near $3850, while support is found just above $3450, near $3250 and in the key long-term zone near $3000.


LTC/USD, 4-Hour Chart Analysis

Litecoin spiked above the $44 level and a key declining trendline a couple of times before turning volatile in the wake of the failed follow-through move, but despite the volatile consolidation, the coin remains close to its swing high. LTC’s strength could signal another swing higher in the short-term rally even as the segment-wide trends mean that the coin is still facing strong headwinds.

Until Litecoin stays above the $38 price level, the short-term break-out remains intact, but barring a broader rally in the segment, the rally is still likely to fail, and odds continue to favor the continuation of the bear market. That said, traders could still hold short-term positions in the coin, with the next key resistance level ahead near $51 and with further support found near $34.50 and between $30 and $30.50.

Ethereum Takes Over Ripple in the Aftermath of Friday’s Surge

XRP/USDT, 4-Hour Chart Analysis

Ripple only got upgraded to neutral in our trend model despite Friday’s rally, as it showed clear signs of relative weakness, and even though it tested the $0.32 level, it’s now back near the $0.30 support, once again proving its weakness, while triggering a renewed short-term sell signal.

The bearish long-term setup is also intact, and another test of the $0.28 level is likely in the coming weeks. Further strong resistance levels are ahead near $0.3550 and $0.3750, with strong support also levels found near $0.26.

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to rally above the key short-term $112 level after an extended period of weakness, and as it outperformed Ripple during and after Friday’s surge, the two coins are now hand in hand on the capitalization list.

ETH has been struggling to hold above the $120 level despite its short-term strength, and although it remains on short-term buys signal in our trend model and the test of the $130 level is possible in the coming days, from a long-term perspective, bearish forces still dominate Ethereum’s market. Strong support is still found in the $95-$100 zone and near the $80 level, while resistance levels are ahead near $145 and $160.

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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.

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.