Crypto Update: Majors Bounce Back after Sudden Spike Lower

The major cryptocurrencies spiked lower on Thursday in late trading, following a failed break-out above $9000 in Bitcoin, but despite the scary looking sell-off, no major support levels have been broken, for now. The leading coins, which got overbought during the recent swing higher, such as Litecoin and EOS, got back to neutral with regards to the short-term momentum readings, and thanks to today’s bounce, both of them triggered fresh short-term buy signals, in the face of the bearish long-term pressures.

Most of the top coins are still below their highs from Monday, but with the successful bounce the short-term uptrend remains intact, and there is still no confirmation of a top in the segment despite the mounting downside risks in the wake of the lengthy counter-trend move. With the escalating tariff war and the global sell-off in risk assets creating a bullish background for the majors, the rally could still continue.

That said, we continue to treat the move as a correction following last year’s crash, and traders should still only consider short-term positions while applying strict risk management rules, as a broad dip below key support levels could lead to a swift plunge towards the lows.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s failed break-out above $9000 triggered the brief but volatile spike lower in the segment, and BTC only found support near $8000 before quickly recovering above $8200. That level acted as short-term resistance last week, and now it provided support for the most valuable coin. Bitcoin is now back above the stronger $8400 level, and it remains well clear of the $7600-$7800 zone, leaving the short-term uptrend intact.

Our trend model remains on a short-term buy signal, and with the momentum indicators showing neutral signals again, another push towards $9200 could be ahead in the coming days, with the next major zone above that found near $10,000. That said, the coin is still on a bearish long-term signal, with further support at $7000 and in the crucial long-term zone near $5850.

ETH/USD, 4-Hour Chart Analysis

Ethereum also declined sharply following a weak break-out attempt on Thursday, violating the short-term support levels near $275 and $260. Despite the spike lower, the coin managed to hold up above well above the key zone between $225 and $230, and market quickly stabilized, leaving the rising short-term uptrend intact.

The short-term momentum readings are back to neutral and our trend model remains on a buy signal on that time-frame even as the long-term setup continues to be hostile. The coin could test the $300 and even $330 level in the coming days, but due to the lengthy counter-trend move, we don’t expect a sustained rally from the current price levels.

Litecoin Bounces Back as Ripple Respects Rising Trendline

XRP/USD, 4-Hour Chart Analysis

Ripple dropped as low as $0.40 together with the broader market, but thanks to the quick recovery, it remained above its advancing short-term trendline, despite its relative weakness. While the coin bounced back above the key $0.42 level, it remains on sell signals on both time-frames in our trend model, and even in the case of a continued rally, traders should still focus on the relatively stronger coins.

Primary resistance is once again ahead near $0.46 and the previous swing high, while above those the next further levels are ahead at $0.51 and $0.56. Below $0.40 key support zones are found at $0.3750, and $0.3550, and we still expect a move below those towards $0.30 in the coming weeks.

LTC/USD, 4-Hour Chart Analysis

Litecoin managed to hold up above the initial support near $100 despite the scary-looking dip, and thanks to the quick recovery and the now neutral short-term momentum readings, the coin is now back on a buy signal in our trend model on that time-frame. Even though the declining long-term trend is intact, another test of the $125 level could be ahead in the coming days.

With the bearish long-term pressures in mind, traders should still only consider short-term positions in the technically strong coin, but a move above $125 could lead to a rally up to the $140 and $150 resistance levels. A weaker support level is found near $110, with further zones below $100 between $85 and $90 and near $75.

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.

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.