Crypto Update: Coins Threaten Lows as Bounce Fades

Although yesterday the major cryptocurrencies staged a rally in late trading, the market quickly rolled over and today, most of the top coins are back near yesterday’s lows. The strong selling pressure is apparent across the board, and despite the bounce, the majors remained well below the pre-selloff levels, maintaining the short-term sell signals in our trend model.

Ethereum continues to lead the market lower, getting very close to yesterday’s lows already, and threatening with a test of the $205 levels in the coming days, which could lead to a new 15-month low in the crucial coin. Correlations are back at panicky levels in the segment, even as some of the majors are holding up somewhat better in the face of the strong bearish pressures, as the total value of the market fell back to $200 billion.

With the long-term picture still being negative for all of the top digital currencies, with the exception of the neutral BTC, the odds of more new lows in the coming weeks are high, especially after the strong momentum move of the last couple of days. Traders should still remain defensive despite the deep losses, until signs of significant relative strength appear among the majors.

BTC/USD, 4-Hour Chart Analysis

Bitcoin stayed below the broken short-term trendline during the bounce yesterday, and the coin is close to testing the $6275 level again, which stopped the freefall yesterday. Below that the weaker $6000 level and the crucial zone near $5850 provide support, and given the momentum of the current move a test of the long-term zone seems likely. The short-term sell signal is clearly in place, especially given the broad weakness in altcoins, but the coin avoided a structural long-term breakdown so far.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still the biggest drag on the segment, and the coin barely held up above yesterday’s panic low today, and new lows are very likely in the coming days. Below the $205 level, further long-term support is found at $180, and that could be a possible base for a more durable rally. Resistance is now ahead at $235 and $260 and traders still shouldn’t enter new positions here.

Altcoins Feeling the Pain Again

XMR/USDT, 4-Hour Chart Analysis

The major altcoins are following Ethereum’s lead today, and even the leaders of the recent rally are declining sharply, with still Monero being in the most bullish short-term pattern. Despite the still intact short-term uptrend, we maintain the short-term sell signal on XMR as well, as the coin violated important support levels, and it failed to show short-term relative strength yesterday. Now, Monero is testing the $108 support level, and a break below that would warn of a test of $100, with a possible move to the August low near $80. That said, with the low still being far below the current price, the coin could be among the leaders of a coming rally, together with BTC.

XRP/USDT, 4-Hour Chart Analysis

Ripple managed to recapture the $0.30 level during yesterday’s bounce, but the coin turned sharply lower today in early trading, and a test of the $0.26 level is still very likely in the coming week. With both the short- and long-term trend being negative, and as our trend model is also on sell signal on all time-frames, traders should stay away from entering new positions here. Further support Is found at $0.23, while resistance is ahead at $0.3130 and $0.32.

LTC/USD, 4-Hour Chart Analysis

LTC is still trading near the key $56 support/resistance level, but it failed to show relative strength amid the bounce and the subsequent decline, so a move to the lows near the $51 support level is still likely.  The coin needs to hold the lows to avoid a likely test of the $44 level, but for now, bearish forces are dominant and odds favor new lows in the coin.

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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.