Crypto Update: Majors Test Lows After Consolidation

After a brief quiet period in the cryptocurrency segment, the top coins turned lower again in the second half of the day and approached their recent bear market lows. While Bitcoin only tested its panic low, Ethereum dipped below at and the still relatively strong Ripple also fell below the key long-term support zone that we have been monitoring for months.

The bearish momentum of the recent period is weakening, despite the current selloff, and a larger bounce still seems likely in the coming week, even as the long-term picture remains overwhelmingly negative.

With most of the majors still deeply oversold and with sentiment being excessively gloomy, another major negative swing is unlikely, and we expect at least a period of choppy consolidation even if the bear market will continue without a meaningful bounce. With that in mind, our trend model is neutral in most cases with regards to the short-term time frame, while the long-term sell signals are clearly in place

BTC/USD, 4-Hour Chart Analysis

Bitcoin bounced off the primary support zone between $4000 and $4050 today that also marks the previous spike low, but the coin still failed to show bullish momentum, and the steep short- and long-term downtrends remain intact despite today’s successful test.

Traders and investors should still only consider ultra-short-term positions despite the deeply oversold momentum readings, and odds still favor the continuation of the bear market from a broader perspective. Strong resistance is ahead in the $5000-$5100 zone and near $5350 and $5600, while the next major support zone is found near $3600.

ETH/USD, 4-Hour Chart Analysis

Ethereum breached his previous low today in early trading after showing relative weakness during the brief consolidation period, and although it’s still hovering around that level, selling pressure is still strong in the market.

The bearish long-term setup is still dominant, and although a larger bounce is likely in the coming period, there is no sign of an end to the bear market. Resistance levels are ahead near $130, in the $150-$160 zone and near $170, while support is found near $118 and in the $95-$100 zone.

Ripple Dips Below Support as Litecoin Holds Bear Market Low

XRP/USDT, 4-Hour Chart Analysis

Ripple is now trading below the key long-term $0.42-$0.46 zone, confirming the weakness of the past few days, and we maintain our short-term sell signal in our trend model, despite the still relatively strong long-term setup.

The second largest coin is getting oversold on the short-term time-frame, but traders and investors still shouldn’t enter positions here, with support levels found at $0.375, and $0.355, and with resistance still ahead near $0.51, $0.54, and $0.57.

Litecoin/USD, 4-Hour Chart Analysis

The bearish leaders of the market have been showing a mixed picture so far, with Litecoin, Dash, ETC, and IOTA holding up above their lows, but with Monero and NEO dipping to new bear market lows in early trading.

Litecoin remains stuck below the $34.50 resistance level, and although a stronger bounce is likely as soon as in the coming days following the extended period of weakness, traders should only enter very short-term positions, given the broad negative trend.

XMR/USDT, 4-Hour Chart Analysis

Monero hit a marginal new low today before bouncing back to the recent bear market low, similarly to Ethereum, and the steep short-term downtrend remains intact.

That said, the negative momentum is weakening, and given the clear positive momentum divergence, a stronger bounce is expected in the coming week, with a possible move up to the prior bear market low near $80. The next level of support is found near $60, and traders and investors should still not enter new positions here.

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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.