Crypto Update: Majors Test Breakdown Levels as Bulls Try to Build Up Momentum

The oversold rally in the cryptocurrency segment continued in the past 48 hours, with several of the majors recapturing key resistance levels in the process. While the bounce carried most of the top coins higher, and the previously weakest digital currencies, such as ETH and XRP have shown early signs of technicals, the move failed short of triggering upgrades in our trend model, and the overall picture remains bearish in the segment.

That said, should the leaders of the sell-off remain stable, some of the dominant short-term trendlines could be broken, and that might lead to a more sustained rally. For now, we urge traders to remain defensive, as last week’s technical breakdown remains intact, and odds still favor a bearish continuation here, even considering the improvements in the short-term setups.

BTC continues to be in the best technical setup among the majors, still holding up above its initial swing low room from July, and the most valuable coin is the closest to a renewed short-term buys signal in our trend model as well. While Monero is also showing stability after rallying together with BTC in the past few weeks, most of the segment is still under clear selling pressure. Until a broader leadership develops, traders should only consider short-term positions in the strongest coins, while applying strict risk management rules.

BTC/USD, 4-Hour Chart Analysis

After briefly dipping below $10,000 Bitcoin bounced back together with the broader market during the weekend but for now, it’s not showing the relative strength that it exhibited over the course of the recent rally attempt. Despite that, it is once again close to the key $11,300 resistance, and it continues to trade in the consolidation pattern that developed in July. The coin could be ready for another rally attempt, but currently, the bearish pressures among altcoins are too strong to ignore.

Our trend model remains on sell signals on both time-frames, and barring a broad rally attempt, we remain negative on the coin’s outlook despite the encouraging bounce. Initial support is still found near $10,000, with further zones near $9,200, $8,400, and $8,200, while resistance zones above $11,300 are ahead near $13,000, and at the prior rally high near $14,000.

 ETH/USD, 4-Hour Chart Analysis

Ethereum climbed up to the declining short-term trendline after finding support in the key $180-$185 zone, and as the trendline is currently converging with the $200 resistance level, the coin faces an important hurdle in the coming days.  The oversold short-term momentum readings are now cleared, and even though a sustained move above $200 could trigger a short-term buy signal in our trend model,   downside risks remain high here.

Despite the current rally, the coin is still relatively weak from a broader perspective, and until more altcoins join the move, sellers remain control of the market. Below the initial zone between $180 and $185 further support zones are found near $160, and $145, while above $200, resistance levels are still ahead near $230 and $265.

Ripple Tops $0.28 as Litecoin Struggles With Prior Swing Low

XRP/USD, 4-Hour Chart Analysis

XRP spiked above $0.28 amid the broad bounce in the segment, but as previously the coin failed to build up momentum and without bullish follow-through, the move quickly faded. XRP remains stuck below the $0.30 level and its recent swing low, even as last week’s fresh bear market low is in a safe distance of the current price level thanks to the weekend rally.

While the bounce could be the start of a larger-scale move, XRP is still on clear sell signals on both time-frames in our trend model, and it remains the prime candidate to lead the market lower due to its persistent relative weakness. Below the $0.28 level, which is currently in focus, support zones are found near $0.26 and $0.23, while above the initial $0.30 level, strong resistance zones are ahead near $0.32 and just above $0.33.

LTC/USD, 4-Hour Chart Analysis

Litecoin continues to show short-term relative weakness, as it has been the case ever since its failed spike above $100, and while it joined the rally attempt this weekend, it remains well below the previously dominant $85-$90 trading range. The coin’s weakness casts a shadow on the move, as participation remains weak, and the bearish technical patterns remain intact among the majors.

Our trend model is still on clear sell signals on both time frames, and while a move above $85 could bring back bulls’ hope, the coin’s market is still showing a bearish short-term trend. Below $75, further support is still found near $64, while resistance zones above $90 are ahead near $100, between $110 and $112, and near $125.

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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.