Crypto Update: Coins Settle Down as Altcoin Rally Fizzles

The major cryptocurrencies are sporting modest gains today in US trading, with Bitcoin’s strength boosting the segment, despite the mixed performance of the key altcoins. While Ethereum managed to break out from its declining short-term trend channel on Monday, triggering a short-lived buy signal in our trend model, the broad rally that bulls hoped for didn’t materialize yet.

Even though BTC continues to test the structurally important resistance zone near the $5850 price level, the rest of the top coins are still significantly lagging behind the most valuable coin. With the bearish long-term setups still looming, bulls would need to see signs of broader strength to sustain the counter-trend move that started in February. For now, with the move maturing, downside risks remain high, and even in the case of another, traders should remain defensive, as the bear market will likely resume.

ETH/USD, 4-Hour Chart Analysis

Ethereum’s volatile swings have been in the center of attention this week, as even though the coin broke out on volume on Monday and reached the $180 resistance sellers quickly pushed it back to the vicinity of the $160 support level. Given ETH’s relative weakness, from a long-term perspective, coupled by the mature counter-trend move, our trend model immediately switched back to a sell signal, despite the weak advancing short-term trend.

While traders could still enter smaller, speculative positions here, expecting a move towards the $200 resistance, a move below $160 could trigger swift sell-off, and strict risk management rules should still be applied here. The $180 level is ahead as the first major resistance, while below $160, support zones are found near $145 and $130.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to flex its muscles, consolidating within the very strong resistance zone near $5850, and while the coin hasn’t broken out yet, a final push above $6000 is possible here. That said, a sustained rally is highly unlikely at these levels, and our trend model is only on a neutral short-term signal due to the mounting long-term risks.

Our trend model is still on a long-term, and above $5850, strong resistance is also ahead near $6000 and $6100. Initial support is found near $5400, with further zones near $4850 and $4450, and traders could still hold on to their short-term, more speculative positions.

Litecoin and Ripple Still Showing Weakness

LTC/USD, 4-Hour Chart Analysis

Litecoin has been trading in a narrow range all week long, trading near the $72.50-$75 support/resistance zone, but showing signs of selling pressure despite its stability. While our trend model remains on a short-term buy signal following the trendline break, the coin is very close to a downgrade, and barring a clear bullish move, the chance of a failed break-out is high here.

A sustained dip below $72.50 would likely lead to another test of the next major support zone found near $64, while in the case of a broader rally in the segment, initial resistance is ahead between $85 and $90, with another zone just above $100. Our trend model is still on a clear long-term sell signal, and below the $64 level the next level of interest is found near $56.

XRP/USD, 4-Hour Chart Analysis

Ripple continues to hover around the strong $0.30 level, failing to show signs of relative strength, with the long-term selling pressure still being apparent in the coin’s market. The coin is also stuck in a declining short-term trend, with the long-term techncials also being hostile for Ripple, and our trend model remains on clear sell signals on both time-frames.

Barring a strong and sustained bullish move, traders and investors should still stay away from the coin, and should the segment-wide counter-trend move roll over, a quick move towards the August low near $0.26 is likely. Above that, another support zone is found near $0.28, while below the bear market low, the next zone of support is near $0.23. In the case of a bullish shift, the $0.32 level is ahead as initial resistance, with further zone near $0.33 and $0.3550.

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.

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.