Crypto Update: Coins Settle Down, Next Large Scale Move Just Ahead?

Volatility declined significantly in the cryptocurrency segment over the past few days, and the majors all settle down in relatively narrow ranges following last week’s wild moves. While the consolidation left the short-term buy signals in place in our trend model, and another push higher is possible here, downside risks remain high in the wake of the sustained counter-trend move and the recent parabolic run-up.

With that in mind, traders and investors could still hold their positions in the relatively stronger coins, and even open new speculative positions, but strict risk management rules remain vital. With Ethereum and Bitcoin keeping up their relative strength, the short-term uptrend is intact in the sector, and until the key short-term support levels hold up, the bulls remain in control of the market.

On the other hand, we haven’t seen signs of meaningful bullish momentum among the smaller coins, and that reinforces our suspicion that the counter-trend move is close to its end, and the bearish long-term forces will soon overwhelm the short-term momentum of the rally.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still trading inside its bullish consolidation pattern, and although the coin has been struggling to get back above the $8000 price level in a sustained fashion, it continues to be well clear of last week’s swing low. With the key $7600 level in no immediate danger, the bullish short-term pattern could lead to a new swing high in the coming days, despite the bearish long-term forces.

BTC remains on a short-term buy signal and a long-term sell signal in our trend model, and the coin remains relatively strong compared to the other top coins. Bitcoin is currently trading right at the $7800 initial support level, and below $7600, last week’s swing low is found near $7000, with further zones near $6750, $6500, and between $6000, and $6100, while resistance is ahead near $8400, $9000, and $9200.

ETH/USD, 4-Hour Chart Analysis

While Ethereum drifted below its steeply rising short-term trendline due to the consolidation of the past couple of days, it remains relatively strong from a short-term technical perspective, with last week’s high being within striking distance for bulls. Thanks to the low-volatility consolidation, Ethereum is still a short-term buys signal in our trend model, despite the hostile long-term technicals, and traders could hold on to their short-term positions even as we still expect the bear market to resume.

The coin’s relative strength is a plus for the whole segment, since ETH has been an important indicator of the short-term pressures in the market for months. Key support is found between the $225 and $230 levels, with further zones near $200 and $180, while resistance is ahead near $260, $275, $300 and $330.

Litecoin Flatlines as Ripple Shows Weakness Again

XRP/USD, 4-Hour Chart Analysis

After failing to get back above the $0.42 resistance level, XRP has been struggling to hold up above $0.40 as well, and the coin is once again showing relative weakness compared to its closest peers. Ripple is still on a short-term sell signal in our trend model despite the positive immediate segment-wide outlook, but until it remains above last week’s swing low, another swing higher is still possible.

That said, with its long-term weakness and the maturing counter-trend move in mind, traders should avoid XRP and focus on the relatively stronger coins, barring a move above $0.42. Above the upper boundary of the crucial long-term resistance zone near $0.46, further levels are ahead near $0.51 and $0.54, while support is now found near $0.3750, $0.3550, and just above $0.33.

LTC/USD, 4-Hour Chart Analysis

LTC has been hovering around the $90 level amid the segment-wide consolidation, as trading volumes and volatility collapsed in the coin’s market. Litecoin is also on a short-term sell signal in our trend model, similarly to XRP, but as it’s much stronger from a broader perspective, in case of a bullish break-out traders re-enter the coin’s market for short-term trades.

That said, with the long-term trend still being bearish, risk management remains essential even considering the relatively stronger coins, and a dip below $85-$90 support/resistance zone could lead to a sharp sell-off in the wake of the sustained counter-trend move. Below that support zone, further zones are found between $72.50 and $75 and near $64, while resistance is ahead just above $100, near $110, with strong long-term one near the $125 price level.

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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.