Crypto Update: Majors Bounce Back but Charts Remain Wounded

Following yesterday’s panicky trading conditions, the cryptocurrency segment turned bullish in late trading and the top coins are all modestly higher today near the U.S market open. Bitcoin has been seeing the most action yet again, and although the most valuable coin got close to the $10,000 level amid yesterday’s plunge, it tested $12,000 today in Asian trading.

Ethereum got back above $300, XRP successfully defended the $0.40 level, while Litecoin is also above the $112 price level that has been in focus throughout yesterday’ session. While BTC is clearly holding up in its short-term uptrend and their movements are the key in the current environment, the broad weakness among altcoins continues to be worrying for bulls.

Our trend model remains on sell signals on both time-frames in most cases, and in light of the momentum of yesterday’s move, and the significant divergences, caution is warranted even regarding short-term trading positions. The sell-off could soon resume, and should the dominant trendlines fall, the pressure could even increase on BTC especially on the relatively weaker altcoins.

BTC/USD, 4-Hour Chart Analysis

Despite the bounce, BTC remains volatile and although the coin briefly topped $12,000, bulls are not out of the woods yet. Today’s session will be critical for the fate of the rally, and given the downside risk in the wake of the lengthy rally, traders shouldn’t enter even short-term positions in the still relatively strong coin.

The $10,000 level is not in immediate danger thanks to the bounce, and with still the support/resistance zone near $9200 being more important from a technical standpoint, bulls still can hope for a recovery, despite the hostile setup. Initial short-term resistance is now ahead near $12,000, with a key long-term zone near $13,000, while support is now found near $11,300, $10,000, $9400, $9200, and $8400.

ETH/USD, 4-Hour Chart Analysis

After bottoming out right at the $275 support, ETH managed to recapture the $300 level today, keeping the short-term uptrend intact despite yesterday’s plunge. That said, the low-volume bounce didn’t change the negative outlook for the coin, and although a test of the highs is possible, even short-term positions are too risky.

A dip below $275 would confirm the larger scale to that we are expecting, and with our trend model is still on sell signals on both time-frames. The $300 level could remain in focus throughout the day, but volatility could quickly pick up following the bounce, and the $275 level could be tested even before the weekend. Initial resistance is now ahead near $330, and with further support zones found near $260, $230, and $200.

Still No Sign of Strength Among Altcoins

LTC/USD, 4-Hour Chart Analysis

The fact that Litecoin continues to show relative weakness, after doing so during BTC’s recent surge, is a negative sign for the whole segment, as there is still no indication of bullish rotation among the majors. Litecoin managed to hold up above its rising trendlines, for now, and it’s also trading north of the $112 support level, in a safe distance of the widely watched $100 price level.

That said, the weak bounce points to an impending breakdown, and the coin could soon test the $85-$90 zone again, as a major top is likely to be concluded during the current swing. IN case of an unlikely recovery, resistance zones are now ahead near $125, $140, and $150, and below the key long-term zone, support is found near $75.

XRP/USD, 4-Hour Chart Analysis

Ripple also continues to show relative weakness, barely holding up above the $0.40 level following the weak bounce and although a major breakdown has been avoided by bulls, for now, the outlook remains grim for XRP. The coin remains well off the line-in-the-sand $0.46 support/resistance level, and even the $0.42 level looks like a tough obstacle despite the broad bounce in the segment.

Our trend model remains on clear sell signals on both time-frames, and until the coin starts showing signs of technical strength, traders should avoid XRP, even in the case of a segment-wide recovery and a renewed buy signal. Below $0.40, further support levels are also found near $0.3750, $0.3550, just above $0.33, and near $0.32, with the long-term $0.30 also being a likely target in the coming weeks.

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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.