Crypto Update: Rally Stalls as Bitcoin Tops $4000, Litecoin Hits Target

We saw yet another rally attempt in the cryptocurrency segment in the past 48 hours, and while a few coins managed to score new rally highs, the top coins failed to gain significant ground, with the momentum of the counter-trend seems to be fading. Correlations and volatility remain relatively low, but the waning momentum is a warning sign that the bulk of the move is already behind us.

While there were signs of weak bullish rotation, with Bitcoin leaving its short-term trading range, the follow-through today was weak. Besides the coins with the strongest momentum, such as Litecoin and Tron, there was no meaningful technical progress in the market.

With that in mind, traders should reduce their exposure to the segment, as although the move is still likely to continue, the bearish risks are increasing, and the risk-reward ratio is lower, especially in light of the still overwhelmingly bearish long-term picture.

LTC/USD, 4-Hour Chart Analysis

Litecoin completed the move to the $38 resistance after hitting a new swing high as expected, and although the short-term uptrend is clearly intact, the coin is now overbought, and traders shouldn’t enter new positions here.

A strong trendline is ahead just above the $40 price level, and although further gains are still possible, given the strong negative long-term trend, the coin got downgraded to neutral with regards to the short-term time-frame. Above $40 further resistance is ahead near $44, while support levels are found near $34.50 and between $30 and $30.50.

ETH/USD, 4-Hour Chart Analysis

The price of Ethereum continues to be capped by the strong $160 resistance level, and the coin failed to show significant momentum in recent days. While the short-term uptrend is intact and a rally up to $180 is still possible, the long-term downtrend is clearly being dominant and the bearish risks are increasing following the strong counter-trend move.

All eyes are on the initial short-term support level near $145, with further support 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

BTC/USD, 4-Hour Chart Analysis

Although yesterday’s spike carried Bitcoin up to the $4000-$405 resistance zone, and the coin left behind its short-term trading range in a positive fashion, we haven’t seen meaningful follow-through in the market of the most valuable coin.

BTC is still on a buy signal in our trend model, but with the December swing high still holding back the coin and the oversold long-term momentum readings now being cleared, traders shouldn’t enter full positions in the relatively weak coin. Further resistance is ahead near $4450 and between $5000 and $5050, while support below the key $3600 level is found near $3250 and $3000.

XRP/USDT, 4-Hour Chart Analysis

While Ripple rallied up to the resistance zone near the $0.3750 level, it remains weak compared to the rest of the market and given the lack of bullish momentum, our trend model remains on a neutral short-term signal.

Traders shouldn’t enter new positions here, and the bearish long-term trend will likely resume and a test of the bear market lows is likely from a broader perspective. Above the primary resistance, a key long-term zone is still ahead between $0.42 and $0.46 zone, while further support is found near $0.32 and $0.30.

IOTA/USD, 4-Hour Chart Analysis

IOTA was among the early leaders of the rally but it failed to hit a new swing high in recent days, as the coin ran into strong resistance near $0.40. While the coin is trading clearly above the $0.35 level and it remains on a short-term buy signal in our trend model, the lack of momentum is the first major warning sign that the counter-trend move is weakening.

Even though a move above $0.40 is still possible, with further key levels ahead near $0.45 and $0.475, traders should reduce their positions here given the hostile long-term setup.

Featured image from Shutterstock

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.