Crypto Update: Coins Turn Choppy as Bounce Continues

The cryptocurrency segment continues to show a bearish picture despite the current oversold bounce, as although the major coins are in safe distance from yesterday’s lows, the charts remain wounded. The top coins are trading within the ranges defined by yesterday’s initial rally, although some of them managed to score new short-term highs in Asian trading.

With the short-term momentum indicators still being in oversold territory following the steep decline of the recent week, the oversold rally could still continue in the coming days, even as the short-term downtrends are firmly intact in most cases. BTC sill in the best shape from a technical perspective, and even though it remains stuck below the $10,000 level, its strength continues to fuel hopes regarding the larger scale rally.

While the fact that LTC is also showing signs of short-term strength is a plus for bulls here, but with most of the smaller altcoins being under severe selling pressure, breadth of the bounce is worryingly weak, suggesting another leg lower after the correction. Our trend model is on sell signals on both time-frames for the top coins, and while a few short-term buy signals might pop up in the coming days, with BTC and LTC being most likely candidates, traders should remain defensive due to the segment-wide trends.

BTC/USD, 4-Hour Chart Analysis

Bitcoin briefly fell below the prior swing low near $9,600 in Asian trading but now, its back below the key short-term level, trying to form a crucial swing low. The freshly formed declining short-term trendline is intact, but from a broader perspective, BTC remains relatively strong. The $10,000 level will likely be in focus during the current correction, but in light of the selling pressure that weighs on altcoins, a bearish continuation is likely to conclude the consolidation.

Our trend model remains on sell signals on both time-frames despite the coin’s technical strength, and the traders should wait for signs, of broader strength before reentering the market. Below the prior swing low, resistance levels are found near $9,400, with the line-in-the-sand level still at $9,200, and the next major support zone below that being at $8,400. In case of a recovery rall4, further resistance is ahead near $11,300 and $13,000.

 ETH/USD, 4-Hour Chart Analysis

Ethereum have been closely tracking the segment-wide trends since Tuesday’s plunge, and the coin is still trading in the no-man’s-land between the $200 and $230 support/resistance levels.  ETH is still in a clear short-term downtrend and even in the case of a stronger bounce, the outlook would remain bearish, especially given the persistent weakness in the smaller altcoins.

Our trend model is still on clear sell signals on both time-frames, and while the consolidation could still continue, with the coin still being oversold according to the short-term momentum indicators, odds favor a move towards $180 and $160 levels in the coming weeks. The relatively weak coin also faces strong resistance near $230, $260, and $275, and traders should avoid entering new positions here.

Ripple’s Bounce Fades as Litecoin Shows Short-Term Strength

XRP/USD, 4-Hour Chart Analysis

While Ripple quickly bounced back to $0.32 after dipping below the key long-term zone near $0.30, it failed to build up bullish momentum, and it remains in a dangerously weak technical setup. The coming weeks will be crucial for the coin, as for now, all signs point to another leg lower in the ongoing bear market, and a test of the $0.28 and $0.26 levels still seems very likely.

That said, the coin is still oversold on the short-term time-frame, and the oversold bounce might reach up even higher in the wake of the steep losses of the recent weeks. Our trend model remains on clear sell signals on both time-frames, and above the initial zone near $0.32, the coin also faces a strong resistance just above $0.33, near $0.3550, and at $0.3750.

LTC/USD, 4-Hour Chart Analysis

Litecoin has been showing early signs of relative strength during the oversold bounce, but it continues to trade near the key $85-$90 support zone. The coin topped yesterday’s intraday high in Asian trading, and although it remains well below the $100 price level, it could test it in the coming days.

Despite LTC’s relative strength our trend model is still on clear sell signals on both time-frames, but we still expect the downtrend to continue after the correction runs its course. Below the initial zone, further support is found near $75 and $64, while resistance above $100 is ahead between $110 and $112, and near $125.

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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.

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.