Crypto Update: Majors Not Out Of The Woods

The cryptocurrency segment continues to be on the verge of a major break-down, with the top coins trading very close to the key support levels that we have been monitoring for weeks. While we still don’t have confirmation regarding the end of the lengthy counter-trend rally, given the bearish long-term setups in the market, the odds of a significant move to the downside are increasing by the day.

While today, the majors continued yesterday’s late-day bounce, the rally attempt faded and the key support levels are still in danger. That said, we still can’t rule out yet another swing higher, even as the pattern of higher highs and higher lows is now clearly broken, but our trend model remains on sell signals due to the elevated downside risks.  Despite the risks, aggressive traders who expect another move higher could enter positions here, as the nearby support levels provide narrow stop-loss opportunities.

While the current setup could lead to a bullish continuation pattern, in light of the long-term pressures, holding positions below the initial support level would be risky, as the coins could enter a swift and decisive sell-off below those levels.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been trading close to the key $7600-$7800 support level all day long, and up until now, it failed to move out of that zone in either direction. BTC is now slightly oversold from a short-term technical standpoint, but given the bearish long-term pressures, it remains on sell signal on both imte-frames in our trend model.

The coin faces short-term resistance levels near $8000, $8200, and $8400, while in case of a recovery, the next major long-term resistance zone lies ahead near $9200. We still expect a move below the $5850 level in the coming weeks, and following the lengthy counter-trend move, traders should remain cautious and only consider small short-term positions, using strict risk management rules. Below the initial zone, further support levels are found near $7000, $6750, and $6500.

ETH/USD, 4-Hour Chart Analysis

Ethereum continues to trade well clear of the key $230 support, and although w haven’t seen evidence of bullish momentum lately, the rally might still resume in the face of the bearish long-term pressures. Today’s choppy session didn’t change the technical setup, but the fact that the coin avoided a clear break-down is a plus for the whole segment.

Despite today’s stability, the coin remains on sell signals on both time-frames, and a move below $230 would likely lead to a quick test of the $200 level. Below that, a strong long-term support zone is found near $180, while resistance zones are ahead near $260, $275, and $300, and traders should still not enter new positions here.

Ripple and Litecoin Drift Sideways as Altcoins Remain Under Pressure

XRP/USD, 4-Hour Chart Analysis

Ripple remained well above the crucial $0.3750 level, hovering around the weaker $0.40 support/resistance level throughout the day. While the coin is still relatively weak from a long-term perspective, it has been performing in line with the market average in recent days. That said XRP is still on sell signals on both time-frames in our trend model, and traders should focus on the relatively stronger coins even in the case of a broad recovery.

Below the initial $0.3750 level, another crucial support zone is found near $0.3550 and a move below that would likely lead to a quick decline towards the $0.30 level. In the case of a less likely recovery, resistance is still ahead near $0.42 and $0.46, while above the prior swing high another level is found near  $0.51.

LTC/USD, 4-Hour Chart Analysis

Litecoin remains just above the key $100 level but despite today’s bounce, the support is still dangerously close. Our trend model is still on sell signals on both time-frames, and a move below primary support continue to be the most likely outcome.

Below $100 the even more important long-term zone between $85 and $90 could be in focus, and as the pattern of higher highs and higher lows is now broken, a break-down would likely have serious consequences. Further support zones are found near $75 and $64, and traders still shouldn’t enter new positions here. In case of a less likely recovery, initial resistance is ahead near $110, with further zones at the recent swing high and near $125, $140, and $150.

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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.