Crypto Update: Rally Running Out of Steam

The cryptocurrency segment saw yet another rally attempt yesterday, but despite the new highs in the likes of Litecoin, Tron, and Binance Coin, the top coins failed to join the rally and the momentum of the move is suspicious. With none of the top 5 coins making meaningful progress, the total value of the marker is little changed, and for now, we are not seeing the buying pressure of the late-December move.

The weakening momentum and the still overwhelmingly bearish long-term picture justified several short-term downgrades in our trend model, and even though the counter-trend move could still continue, until we observe signs of technical strength, traders should be defensive towards the segment. With the negative long-term forces still being dominant, at least a test of the bear market lows is likely, even if a broader bottoming process is already underway.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade near the $4000-$4050 resistance zone, as although the rally attempts failed in the most valuable coin, it remains stable holding up well above the key support level near $3600 and the short-term trendline that is currently found near $3850.

That said, with no meaningful bullish momentum present, and with the negative long-term picture in mind, BTC is now more vulnerable to a selloff, since the oversold long-term momentum readings are now cleared. Above the primary zone, further resistance is ahead near $4450 and between $5000 and $5050, while support below the key $3600 level is found near $3250 and $3000.

ETH/USD, 4-Hour Chart Analysis

Despite an intraday bounce, Ethereum continues to be stuck in a short-term consolidation pattern and given the weakening momentum and the coin’s relative weakness, the counter-trend move could already be over, or a deeper pullback might be ahead. With that in mind, traders should stay away from entering new positions here.

A move above $160, towards the $180 level is still possible, but in light of the long-term trend, bearish risks are quickly increasing. Initial short-term support is found near $145, with further zones still found near $130, $120, and between $95 and $100, while resistance above $180 is ahead near $200.

Bitcoin Tests Resistance Zone but Move Lacks Momentum

LTC/USD, 4-Hour Chart Analysis

Litecoin experienced two failed momentum moves in the past few days, and due to the clearly weakening momentum, the coin is now only on a neutral short-term trend signal. The oversold long-term readings are also cleared, and although there is no technical evidence that a new short-term downtrend given the bearish long-term setup, traders shouldn’t enter new positions here.

The coin topped out above the $40 level, while respecting the broad declining trendline, and all eyes are now on the $38 support/resistance level, with further support found near $34.50 and between $30 and $30.50, and with another strong resistance zone ahead near $44.

XRP/USDT, 4-Hour Chart Analysis

The technical position has been unchanged for Ripple in recent days, and the coin is trading in a very narrow range between the $0.3550 and $0.3750 levels, still showing relative weakness compared to the leaders of the counter-trend move and its main peers as well.

XRP is still on a neutral short-term and a bearish long-term trend signal with the key long-term resistance zone between $0.42 and $0.46 being out of reach, for now, and with further support found near $0.32 and $0.30.

EOS/USD, 4-Hour Chart Analysis

While EOS bounced higher together with the broader market in December, it never triggered a buy signal in our trend model due to its persistent technical weakness. The coin entered a volatility compression pattern since then, and although it held up well during the pullbacks, the $3 level proved strong for bulls.

A sustained move above the key level would trigger a buy signal, but given the market-wide weakness in momentum, traders should still stay away from the coin, especially given the bleak long-term picture, with short-term support found near $2.675 and $2.50, and further resistance ahead near $3.20 and $3.50.

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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.