Crypto Update: Coins Pull Back as Rally Runs Out of Steam

While the early-week rally in the majors triggered a few short-term upgrades in our trend model, the bearish overall picture in the cryptocurrency segment hasn’t changed, and for now, the move stalled. The leaders of the rally, Ripple, Bitcoin Cash, EOS, and Stellar are holding on to most of their gains despite the pullback, but the largest coins failed to maintain the bullish momentum.

With the strongest top coins holding up above their recent trading ranges, the break-out could still continue, but until a broader rally develops traders should remain cautious with new positions as the long-term downtrends are intact in most cases.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been one of the strongest coins lately and it briefly topped the $0.54 level before rolling over to the current pullback. The coin is now testing the $51 level again, but it’s clearly above the prior trading range, keeping the short-term buy signal intact in our trend model, even as the long-term neutral signal is also in place.

Traders could play the short-term trend here, but full positions are still not advised, given the still bearish segment-wide trends. Strong resistance is ahead near $0.54, $0.57, and $0.64, while support zones below $0.51 are found between $0.42 and $0.46 and near $0.375.

BTC/USD, 4-Hour Chart Analysis

Although Bitcoin tested the $6500 level in the past couple of days, it failed to durably recapture the resistance level, so the short-term sell signal is still in place in our trend model. The relative weakness of the largest coin is a negative sign for the segment, but the current pullback is not severe and a new swing high above $6500 would be an important technical improvement, at least form a short-term perspective.

Above the primary resistance level, further zones are ahead near $6750 and $7000, while support is found at $6275, $6000, and $5850. Traders and investors still shouldn’t enter positions here, even after the slight technical improvement in the segment.

Altcoins Still Missing Sustained Bullish Momentum

ETH/USD, 4-Hour Chart Analysis

While Ethereum briefly hit a new swing high, it failed to trigger a short-term buy signal, and with the very strong resistance zone ahead, the second largest coin could be in for a very hectic period. That said the fact that ETH is holding clearly above the key $200 level is a plus after the extended period of relative weakness.

All eyes are still on the $235 resistance level and the declining long-term trendline near the current price level, and a durable move above $235 could set up a larger scale rally. For now, traders and investors should still stay away from the coin, despite the recent advance. Further strong resistance is ahead near $260 while support levels below $200 are found at $180 and $170.

LTC/USD, 4-Hour Chart Analysis

Litecoin formed a similar pattern as Ethereum, briefly rising above the recent swing high, but it also failed to trigger an upgrade in our trend model, turning sharply lower off the $56 resistance level. The coin remains in a clear long-term downtrend and until at least a short-term trend change traders stil shouldn’t enter positions here.

Dash/USD, 4-Hour Chart Analysis

Dash also ran into resistance near $170 after the recent encouraging rally and although the coin remains well above the key $150 level, it also failed to show bullish follow-through, confirming the still apparent selling pressure in the segment. With that in mind, there is still no evidence of a healthy bullish leadership so we remain cautious with regards to the outlook for the coming weeks.

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.

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.