Crypto Update: Sell-Off Continues but Altcoins Hold Support Levels

The major cryptocurrencies are under pressure yet again following a weak overnight bounce, and Bitcoin and Ripple already hit new correction lows today in European trading. BTC has been struggling to stay above the $10,000 price level in the volatile environment. Despite the marginal new lows, a clear breakdown below last week’s swing lows has still been avoided and that gives hope to bulls that the top coins will once again resume the broader-scale rally.

That said, with more and more short-term trendlines being broken, the odds of a trend change are increasing, and in light of the length of the preceding rally, caution is warranted, and our trend model remains on sell signals on both time-frames in most cases. We expect volatile trading to continue in the coming crucial days, and until we have a clearer picture of the short-term direction, traders should avoid entering even short-term positions.

The smaller coins, and especially the prior leaders of the rally showing stability, and the fact that the top coins are holding up near their prior swing lows is a positive sign, but until we have a confirmed swing low at our hand, traders should remain defensive.

BTC/USD, 4-Hour Chart Analysis

Bitcoin remains relatively weak from a short-term perspective, as it led today’s decline, hitting a new correction low near $9700. The most valuable coin is still well clear of the crucial zone near $9200, with bulls still fighting for the control of the $10,000 price level, with price action being very choppy, so far,  today. BTC stayed well below the $11,300 resistance during the recent weak bounce, so our trend model remains on sell signals on both time-frames, as the basic technical setup remains unchanged.

The coin is clearly below the rising trendlines that it broke in recent days, but with the momentum of the decline being relatively weak, a recovery above $11,300 could still revive the uptrend. Initial support is now found near $9400, while below the key zone near $9200, further support is at $8400, with resistance above $11,300 ahead near $13,000.

ETH/USD, 4-Hour Chart Analysis

Ethereum is in a slightly better shape compared to BTC, from a short-term technical perspective, and although it drifted below the key rising trendline that we have been monitoring, it only briefly dipped below $275. ETH is trading in a short-term correction pattern, and a move above $300 could trigger a renewed short-term buy signal, despite the mounting long-term risks.

The coming days will be crucial for ETH as well and should it continue to show technical stability, the whole segment could get a boost from its strength. The $275 price level will likely remain in focus, while below that further support zones are found near $260, $230, and $200, with resistance above $300 ahead near $330, and at the prior swing high near $360.

Litecoin and Ripple Changed in Choppy Market

LTC/USD, 4-Hour Chart Analysis

Altcoins are lower across the board as nervous trading continues in the segment following last week’s steep drop. While Litecoin bounced back hard during the weekend, yesterday it got close to its swing high from last week, and today, it’s hovering yesterday’s range despite the overnight bounce and today’s early sell-off.  The coin is trading near its rising secondary trendline, while holding up above the initial support zone between $110 and $112.

While its current stability is a positive sign, it’s not enough to warrant an upgrade in our trend model, so the coin remains on sell signals on both time-frames, and traders should stay away from entering even in short-term positions. A move above $125 could trigger a renewed short-term buy signal, but a break below the initial support zone might lead to a broader-scale plunge due to the mounting long-term risks. Below $110 further support levels are found near $100, between $85 and $90 and near $75, while above $125, resistance is ahead near $140 and $150.

XRP/USD, 4-Hour Chart Analysis

Ripple is still stuck below the $0.40, and while the coin hit a new correction low today in early trading together with BTC it remained clearly above the next main support zone near $0.3750, despite its apparent relative weakness. Our trend model remains on sell signals on both time-frames, and even in the case of a recovery and a renewed buy signal, traders should continue to focus on the relatively stronger coins.

With the stability of the other top coins in mind, another bounce is possible here, but we still expect the coin to resume its bear market soon. Below the initial support zone, further zones are found near $0.3550, just above $0.33, with strong long-term resistance levels ahead near $0.42, $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.

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.