Crypto Update: Coins Settle Down as Bulls Defend Support Levels

The cryptocurrency segment is having a relatively quiet day so far following yesterday’s broad sell-off, with the major treading water so far in the choppy environment. Trading activity is higher than in recent weeks, with especially Ripple seeing above-average activity after plunging below the key $0.30 level yesterday, but the likes of Bitcoin, Ethereum, and Litecoin have also been seeing higher volumes than during the recent consolidation.

BTC remains very strong from a short-term technical perspective, but the top altcoins are all showing technical weakness and that continues to support our bearish long-term view, even though the fate of the counter-trend rally is still not sealed. The battle for the key support levels is on, with the $160 level in ETH, the $0.30 level in Ripple, and the recent swing high near $5400 in BTC being at the center of attention.

Should the coins hold up above those levels and should a broader leadership develop in the coming days, the rally could still continue, but in light of the long-term setups and the short-term weakness across the board, we remain defensive here.  Our trend model is also on sell signals on both time-frames in the case of the majority of the top coins, with no evidence of a long-term trend change in the segment.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been leading the way lower since the start of yesterday’s sell-off, and despite the bounce back above $0.30, the coin remains in a peculiar technical position. Following several months of choppy consolidation, littered with failed spikes higher, XRP is now threatening with a move towards $0.28 and $0.26, the August bear market low.

Our trend model is firmly on sell signals on both time-frames, and the short-term pattern is also bearish, so traders still shouldn’t enter new positions. In the case of a recovery, initial resistance is still ahead near $0.32, with further levels near $0.33 and $0.3550.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade above its recent swing high and the $5400 price level, holding on to its short-term buy signal in our trend model as well. Despite the current stability and the bullish short-term pattern, the most valuable coin is still clearly in a long-term downtrend, and in light of the broad weakness in altcoins, we remain skeptical about the durability of the current rally.

Even in the case of a recovery in the top altcoins, traders should only consider short-term positions in the relatively stronger coins, such as BTC, and implementing strict risk management rules should remain a top priority here. The $5850 level is still the next target for bulls, while below the initial support zone further zones are found near $5050, $4800, and $4450.

Ethereum and Litecoin Stable Following Weak Bounce

ETH/USD, 4-Hour Chart

Ethereum is still dangerously close to the $160 support level and its recent low near $155, and although the coin has been showing stability today, the weak bounce is a worrying sign for bulls. Eth is trading below the rising short-term trendline that it broke below yesterday, and barring a quick recovery, the immediate outlook remains bearish.

Our trend model is also on sell signals on both time-frames, and with the coin being relatively weak from a broader perspective, the bear market is likely to resume in the coming weeks, even if we get one more push higher in the counter-trend rally. Below the previous swing low, support s found near $145 with further zones near $130 and $112, while resistance is still ahead near $180 and $200.

LTC/USD, 4-Hour Chart Analysis

LTC continues to show stability recovering to the key support zone between $72.50 and $75 after violating its lower boundary yesterday. The coin is still trading near a key rising short-term trendline, and given its prior leadership in the counter-trend move, its behavior will be crucial to the whole segment. While Litecoin has been relatively weak during the recent consolidation, it might still resume the rising trend.

That said, LTC is still on clear short- and long-term sell signals in our trend model, and until we see signs of technical strength, traders should stay away from entering positions. Below the initial zone, further support is found near $64 and $56, while above the strong resistance zone between $85 and $90, the next zone is ahead just above $100.

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.