Crypto Update: Coins Rebound After Steep Sell-Off

It was a tumultuous weekend for the cryptocurrency segment, and although before the weekend, we saw a low-volatility short-term advance, the immediate outlook is now much less clear. The sudden steep selloff pushed the majors below key support/resistance levels yesterday, and although the counter-trend rally might still resume, for now, traders should remain defensive.

Today’s relative stability and the late-day recovery attempt are positive signs for the rest of the week, but until we see the top coins break back above the key short-term levels, our trend model will remain on short-term sell signals in the wake of the failed weekend moves.

That said, there were plenty of encouraging developments in the segment today, since Bitcoin held up above its rising short-term trendline, Ethereum managed to remain above the $130 price level, while Ripple is showing relative strength for the first time in weeks thanks to its long-awaited listing by Coinbase.  While the short-term outlook is mixed, the bearish long-term setups are clearly intact in the segment, so caution is warranted, even in light of today’s positive trends.

ETH/USD, 4-Hour Chart Analysis

One of the leaders of the recent rally, Ethereum continues to trade in the consolidation pattern that developed following yesterday’s plunge. The coin remains stuck below the previously dominant short-term trendline and the $145 price level, but as the $130 level held up today, and the coin avoided another leg lower, a quick recovery is still in the cards.

Despite today’s stability, ET remains on a short-term sell signal in our trend model, with the long-term sell signal also clearly being in place. Support is still found near $130, $112, and in the key long-term $95-$100 zone, while above $145, strong resistance is ahead near $160.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is trading near the $3850 support/resistance level before the US close after finding support at the rising short-term trendline yesterday. While the coin is still clearly in a bearish long-term setup, a quick recovery could reignite the counter-trend move, even following the steep Sunday plunge.

The $4000-$4050 zone could be at the center of attention in the coming days, but a move below the weekend low would likely trigger a test of the $3600 and $3450 levels. With the long-term pressures in mind, traders shouldn’t enter new positions here, until we see clear signs of strength, with further resistance ahead near $4450.

Ripple Spikes Higher on Bullish News as Litecoin Shows Strength

XRP/USDT, 4-Hour Chart Analysis

Although Ripple has been very weak in the past weeks, missing the bulk of the counter-trend move and plunging together with the broader market yesterday, today, it surged higher by more than 10%. The news-induced rally pushed the coin up to the $0.33 level and the recent swing high, but despite that and the stability of the other majors, XRP remains on sell signals on both time-frames, and traders should wait for signs of bullish follow-through before entering positions.

The coming days will be crucial for Ripple, and in light of the apparent selling pressure of the recent weeks, the test of the $0.28 and $0.26 levels still seems likely, with further support levels now found near $0.32 and $0.30, and with targets for a possible break-out being ahead near $0.3550, and $0.3750.

LTC/USD, 4-Hour Chart Analysis

After spiking below the $44 support level, Litecoin found support near the previously dominant broader declining trendline, and it managed to recover above the key support. While LTC broke the short-term uptrend line, the counter-trend rally could still resume after the pullback but until a move above $48, traders should remain cautious with new positions given the hostile long-term setup. Below $44 key support is found near $38, while strong resistance is ahead at $51.

EOS/USD, 4-Hour Chart Analysis

While EOS fell by almost 30% compared its recent swing high, it found support above the rising short-term trendline, showing just how steep the preceding advance was. That said, the long-term setup is bearish, and after hitting the $4.50 target, EOS might already resume its bear market.

A recovery above $4 would be a very positive sign, at least regarding the short-term time-frame but for now, traders should stay away from entering even short-term positions. Support zone below the initial $3.50 level are found near $3 and $2.80, while resistance is ahead near $3.80 and $4.

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.