Crypto Update: Majors Test Swing Highs, but Consolidation Continues

While the top coins gained ground during the weekend the basic technical setup has been unchanged, with the short-term consolidation within the broader counter-trend move ongoing. Bitcoin and Ethereum have been showing encouraging relative strength, increasing the odds of another leg higher in the move, despite the still clearly negative long-term technicals.

Compared to the bullish short-term trend and the encouraging consolidation pattern, we still urge caution for traders here, as the continuation of the bear market is still likely, and in the current setup, the Fear Of Missing Out could be very costly, should the long-term forces suddenly interrupt the counter-trend move.

With that in mind, and with our trend model still being on short-term sell signals due to the, clearing overbought readings, traders and investors should still not enter positions here. Should a broad move higher lead to new swing highs, traders could again enter smaller, more speculative positions in the relatively stronger coins, applying strict risk management rules.

BTC/USD, 4-Hour Chart Analysis

Bitcoin got very close to last week’s swing high thanks to the weekend bounce, but for now the prior high held back the most valuable coin, and the overbought short-term momentum readings haven’t been cleared yet. While the pullback hasn’t carried the coin back to the $4450 support/resistance level, and the short-term momentum indicators still show overbought readings, a renewed buy signal could soon be triggered, should the consolidation continue.

Key support is still found near $4450, but should the coin respected the short-term support near $4800, even a rally up to the structurally important $5850 level is possible in the coming weeks. That would still keep the long-term downtrend intact, with further support levels found near $4200 and in the $4000-$4050 zone.

LTC/USD, 4-Hour Chart Analysis

Litecoin showed encouraging stability during the weekend, getting close to its recent swing despite the severely overbought momentum readings and although it failed to score a new swing high, it is still trading within the key $85-$90 support/resistance zone. Following today’s pullback, the overbought readings are almost cleared, and the coin is close to triggering a renewed short-term buy signal, even as the long-term setup remains clearly negative.

Our trend model remains on sell signals on both time-frames, and although another leg higher possible in the counter-trend move, odds still favor the continuation of the bear market. Further resistance is ahead just above $100, while support zones are found between $72.50 and $75, and near $64 and $62.

Ethereum Gathers Relative Strength as Ripple Fights with Resistance

ETH/USD, 4-Hour Chart

The most positive short-term development in the segment has been the performance of Ethereum in recent days, and the coin was among the few majors that climbed above last week’s swing highs. Given the ongoing market-wide consolidation and the bearish long-term setup, that wasn’t enough to trigger a buy signal in our trend model just yet.

That said, should ETH retain its relative strength, another leg higher in the counter-trend move is possible here, with the next zone of resistance being ahead near $200. Initial resistance is near the current price level, while support zones are near $160, $145, and $130.

XRP/USDT, 4-Hour Chart Analysis

Ripple had the most active weekend among the top coins, with several rally attempts failing near the $0.3750 resistance, while with a more bullish long-term background, the volatile consolidation could be positive, we remain skeptical with regards to the short-term outlook for XRP.

We still don’t see signs of stable and organic buying pressure in the coin’s market, not even on the short-term time-frame where the likes of LTC and BTC are bullish, so traders should still focus their efforts on the stronger currencies, just as we emphasized in the past two months. Below the initial $0.3550 level, support zones are found near $0.33, $0.32, $0.30, and $0.28, while above the primary zone, strong resistance is ahead at $0.40 and $0.42.

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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.