Crypto Update: Rally Stalls as Altcoins Continue to Weigh

The cryptocurrency segment continues to be two-faced, with Bitcoin showing relative strength, but the major altcoins being much weaker. While yesterday Ethereum followed BTC higher, the second largest coin failed to build on its strength and turned lower together with the broader market. Although BTC also pulled back, it managed to bounce higher in late trading, getting close to yesterday’s high.

With that, the technical breakout from the short-term consolidation pattern remains intact, at least in the case of BTC, leaving the short-term buy signal in place as well. That said, apart from ETH, altcoins are all on short- and long-term buy signal despite the rally attempt, so the formation of a larger scale topping pattern is still the most likely scenario following this year’s rally.

The fact that the early leaders of the broader rally, such as Litecoin, Dash, and EOS failed to regain their strength casts a shadow even on BTC’s advance, and caution continues to be warranted even considering short-term trading positions in the relatively stronger coins. Traders should wait for sings f broad technical strength before reentering the market, as downside risks remain dominant here.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin remains in a fresh short-term uptrend, after breaking the pattern of lower highs and lower lows yesterday, the segment-wide trends don’t support another significant move higher. The test of the previous swing high is still possible here, and in the case of a broader recovery, even a new high is in the cards. Despite that, until some of the other majors join the rally, traders should still apply strict risk management rules even with small short-term positions.

Odds still favor the continuation of the initial late June sell-off, even as the coin is in safe distance of the key $11,300 support resistance level. Below that, further strong zones are found near is found near $10,000, $9400, and $9200, and $8400, with resistance ahead near $13,000 and at the prior swing high just below $14,000.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also clinging on to its short-term buy signal despite today’s weak performance, but with no other major altcoin joining the rally, the probability of a successful breakout remains slim. Despite that, the coin held up above the previously dominant rising trendline and the $300 support level, and a bullish continuation is still possible here.

A durable breakout might still carry ETH above $330, with the test of the previous swing high being possible as well, but given today’s weakness, traders should keep the significant downside risks in mind. A move below $275 would likely trigger s volatile sell-off, with further support levels found near $260, $230, and 4200, while above the initial resistance zone,  the next major zone is ahead near $360.

Ripple Remains Under Pressure as LTC Fails to Join Rally

LTC/USD, 4-Hour Chart Analysis

While Litecoin got close to the $125 level yesterday in late trading, it once again failed to move above the stiff resistance zone and drifted back below the rising trendline that it had been tracking lately. LTC is still hovering above the $110-$112 support zone, and even the lower end of its recent very tight range, but its failure to join BTC’s rally after such a lengthy consolidation is a negative sign for the coin and the whole segment.

Litecoin’s recovery would be crucial for bulls here, but the coin remains on sell signals on both time-frames, for now. A move above the initial zone near $125 would still likely to lead to a test of the $140, and possibly even the $150 resistance levels, but a bearish swing remains more likely. In case of a breakdown below $110, further support zones are still found near $100, between $85 and $90, and near $75,

XRP/USD, 4-Hour Chart Analysis

Ripple failed to hold up above the $0.40 level despite its weekend rally attempt and Bitcoin’s breakout, and today, the coin hasn’t shown signs of strength either. With that, it’s clear that XRP remains under larger-scale selling pressure, leaving our trend model on sell signals on both time-frames. XRP is well above the make-or-break $0.3750 price level, but a key breakdown still seems likely in the coming weeks.

Barring a broad recovery in the segment and a move above the $0.42 level by XRP, traders should continue to avoid the coin, as its bear market will likely resume soon. Below $0.3750, further support zones are found near $0.3550, just above $0.33 and near $0.32, while resistance levels above $0.42 are ahead near $0.46 and $0.51.

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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.