Crypto Update: Majors Recover from Another Spike Lower as Litecoin Triggers Buy Signal

While the choppy consolidation ended on Thursday in the cryptocurrency segment, we still didn’t have a decisive move in either direction. The sharp sell-off that scared bulls Wednesday in late trading didn’t lead to a major break-down, and the fact that the top coins held on above their key short-term support levels is a positive sign for the coming week.

Our trend model remains on short-term buy signals in most cases, and with today’s rally, Litecoin joined the ranks of the bullish majors, but the long-term outlook is still overwhelmingly bearish in the segment, so traders should still only consider short-term positions while using strict risk management rules. Bitcoin’s continued relative strength is another plus, with regard to the immediate outlook, but in the wake of the lengthy counter-trend move, downside risks continue to increase, and a broad support break could lead to a strong wave of selling in the segment.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade in a bullish consolidation pattern and as the $7600 level was successfully defended during the recent dip, another upswing is likely here. That said, the bearish long-term trend is still likely to resume soon, so traders should stick to smaller positions here. Our trend model remains on a short-term buy single and a long-term sell signal, and the most valuable coin will start the weekend just below the upper boundary of the consolidation pattern.

The prior swing high provides the first line of resistance near $8400, and above that, major zones are ahead near $9000 and $9200. Support is now found near $7800, $7600, and $7000, but in the coming weeks, a move below the key long-term $5850 level is still very likely.

ETH/USD, 4-Hour Chart Analysis

Although Ethereum also respected the $230 support, leaving the short-term buy signal in our trend model intact, it’s showing early signs of weakness compared to Bitcoin. Despite the weakness, the short-term pattern is bullish in the coin’s market, and another upswing is possible here.

The broad recovery among the smaller altcoins following Wednesday’s spike lower is positive for ETH, but given the length of the counter-trend move, a sustained rally is unlikely here. Key support is still found between the $225 and $230 levels, with further zones near $200 and $180, while resistance is ahead near $260, $275, $300, and $330.

Ripple Remains Under Pressure as Litecoin Tests Swing High

XRP/USD, 4-Hour Chart Analysis

Ripple continues to lag the broader market despite today’s broad rally in the segment and it’s not just far below the key $0.42 resistance level, but it failed to recapture $0.40 level as well. Our trend model remains on sell signals on both time-frames, and in light of the coins persistent weakness, even in the case of bullish continuation following the current consolidation, traders should focus on the relatively stronger coins.

While a segment-wide breakout, could lead to a test of the previous swing high just above the $0.46 level, we still expect the bear market to resume in the coming weeks and downside risks are very high for XRP, and a break below $0.3550 could lead to a quick move towards $0.30. Above that, further support is found near $0.32, just above $0.33, and near $0.375, while resistance above $0.46 is ahead at $0.51 and $0.54.

LTC/USD, 4-Hour Chart Analysis

After touching the lower boundary of the key $0.85-$0.90 level yesterday, LTC recovered and surged to a new one-week high today. The coin rallied above the $100 price level, and it got close to its recent swing high as well, triggering a short-term buy signal in our trend model in the process. The fact that one of the initial leaders of the counter-trend move is showing relative strength again is positive for the whole segment, but with the long-term pressures in mind, traders should still lonely consider smaller positions here.

Litecoin remains in a short-term uptrend about the long-term downtrend is still intact, and a move below the initial support zone could lead to a volatile sell-off, with further zones found between $72.50 and $75 and near $64. On the other hand, in the case of a break-out, resistance is ahead near $110, with strong long-term one found near the $125 price level.

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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.