Crypto Update: Majors Attempt Bounce but Technical Setup Still Bearish

Following yesterday’s key short-term breakdown the top cryptocurrencies found support today in early trading and attempted a weak rally towards the previous support levels. With Bitcoin showing relative weakness overnight, and with Ripple and Ethereum only bouncing back slightly, the break-down remained clearly intact despite the rally attempt and the negative short- and long-term trends are still dominant.

Our trend model is also on sell signals on both time-frames, and even short-term traders should be aware of the still high bearish risks here, with the test of the bear market lows still being likely in case of the overwhelming majority of the top coins. With that in mind, traders and investors still shouldn’t enter new positions here, although even the still relatively weak Ripple is holding up above its respective bear market low.

BTC/USD, 4-Hour Chart Analysis

Despite the brief period of weakness, Bitcoin continues to be relatively stable from a short-term perspective, with all eyes still on the primary short-term resistance zone near the $3450 level and the $3250 support level.

Given the bearish market-wide trends, BTC remains on sell signals on both time-frames in our trend model, and barring a quick recovery to the previous trading range, the test of the bear market low and the key long-term support near $3000 is likely ahead, with further resistance zones are ahead near $3850 and between $4000 and $4050.

ETH/USD, 4-Hour Chart Analysis

While ETH avoided a test of the key $95-$100 zone, for now, it only managed to recover a small portion of its losses and even the $112 resistance seems to be out of reach. Odds still favor a move towards the prior bear market low near the $80 price level, and the short- and long-term trends are both clearly intact.

The coin remains relatively weak form a long-term perspective, and traders and investors should stay away from entering new positions here with the strong $120 and $130 levels also ahead as resistance above the primary zone.

Ripple Continues to Drag the Market Lower

XRP/USDT, 4-Hour Chart Analysis

Ripple is still close to breaking its prior bear market low near $0.28, despite the bounce, and a move below that would likely trigger swing towards the $0.26 support and the August lows. The coin remains very weak from a short-term technical standpoint. The failed rally attempt respected the initial resistance zone near $0.30 and further levels are ahead for XRP faces strong resistance near $0.32, and $0.3550.

LTC/USD, 4-Hour Chart Analysis

While volatility remained relatively low following the break-down, correlations are still very high and the even the strongest altcoins are under selling pressure. Litecoin failed to build on its recent relative strength during the bounce and the $30-$30.50 support zone is still in danger, with the long-term downtrend clearly being dominant.

Below the primary zone, further support is found near $26, with the prior bear market low being found near $23 and below the $34.50 level, our trend model remains on sell signals on both time frames, with another strong resistance zone ahead near $38.

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.

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.