Crypto Update: Coins Turn Lower as Ethereum Hits Three-Week Low

The cryptocurrency segment saw another wave of selling in today in early trading, as the weak rally attempt that was led by Litecoin faded, and the majors quickly got close to their recent swing lows. Ethereum and Ripple have been leading the way lower today, but on a positive note, Litecoin held up well, and Bitcoin is also north of the key $7600 level. With that, a major move lower could still be avoided, but the odds of a larger-scale sell-off are rising.

Our trend model is on sell signals on both time-frames with regards to the overwhelming majority of the top coins, with only LITC being on short-term buy signals thanks to its relative strength. While a quick recovery could change that, in light of the segment-wide weakness, traders should still only consider smaller positions while using strict risk management rules even in the stronger coins.

Looking at the smaller coins, the prior readers of the rally continue to show weakness, and that confirms the short-term pressures. That fact, coupled with the bearish long-term technicals, means that downside risks are high, even regarding short-term trading positions.

BTC/USD, 4-Hour Chart Analysis

Bitcoin plunged below the $7800 level today, and it already tested the $7600 support due to the volatile sell-off. The prior swing low is now dangerously close, and traders should stay away from entering new positions here, despite the lack of a confirmed short-term downtrend. A durable move below $7600 would likely lead to a test of the next major zone near $7000, and the sell-off could easily accelerate following  the lengthy counter-trend move.

Below $7000 further support levels are found near $6750 and $6500, and all eyes will be on the key long-term zone near $5850 in the case of a deep sell-off. Our trend model is still on sell signals on both time-frames, but a recovery is still possible here, with resistance levels above $7800 ahead near $8000, $8200, and $8400.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been showing relative weakness today, and the coin spiked below the $230 level for the first time since mid-May. The coin quickly recovered above that level, but in light of the segment-wide weakness, the immediate outlook for the coin is clearly negative. A sustained move below $230 would likely lead to a test of the $200 and $180 price levels, with the latter being a more important technical level.

Ethereum is close to confirming a short-term downtrend due to its relative weakness, and it needs to hold above $230 to avoid a significant bearish move. In the case of recovery, the coin faces strong resistance near $260, $275 with a weaker short-term zone at $250, but a broad rally could even carry ETH up to $300.

Ripple Hits Swing Low as Litecoin Holds its Ground

XRP/USD, 4-Hour Chart Analysis

Ripple turned sharply lower together with the broader market and although it experienced a brief period of relative strength earlier this week, it failed to maintain its stability. XRP hit a new swing low today, plunging below the $0.3750 support and threatening a test of the $0.3550 level.

The coin is still on clear sell signals on both time-frames in our trend model, and in light of today’s dip, a test of the $0.30 level seems even more likely in the coming weeks. Initial resistance is now found near $0.3750, with further levels ahead near $0.40, $0.42, and $0.46, while support below $0.3550 is found just above $0.33 and near $0.32.

LTC/USD, 4-Hour Chart Analysis

Litecoin is still clearly the strongest major, and although it dipped lower today due to the broad sell-off, it is well above its recent swing low. The coin is still on a short-term buy signal in our trend model, while the long-term signal remains bearish.

Even though the rally might still continue in the relatively strong coin’s market, the segment-wide weakness will likely drag LTC lower soon. So, despite the buy signal, traders should continue to use strict risk management rules concerning their short-term positions. Below the initial zone near $110 supportis found nera $100, in the $85-$90 zone, and near 75,while resistance is ahead near $125, $140, and $150.

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.

Featured image from Shutterstock.

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.