Crypto Update: Short-Term Rally Collapses as Failed Break-Out Patterns Form
The counter-trend rally that resumed yesterday following a shallow correction abruptly ended today in the cryptocurrency segment, as the major coins suddenly got smacked lower in a concerted fashion. The top digital currencies all lost more than 10% compared to their new swing highs, and most of them violated key support levels while breaking below the rising short-term trendlines as well.
As the recent rally didn’t change the bearish long-term setup in the segment, the failed move is not a surprise, but the momentum of the sell-off has been unexpectedly strong in the slightly illiquid weekend environment. Ethereum’s failed break-out above $160, together with Bitcoin’s failed move above the January swing high triggered the plunge from a technical perspective, and our trend model also switched to sell signals on the short-term time-frame.
The long-term sell signals in our model remained in place throughout the rally and although the current spike lower could turn out to be just a correction, given the still hostile long-term setup, traders shouldn’t enter new positions here, even in case of the relatively stronger coins.
ETH/USD, 4-Hour Chart Analysis
The leaders of the move hit their target levels ahead of the plunge, with most notably ETH topping the key $160 level, but the coin not just moved back below that level, but quickly violated the $145 support/resistance level as well. While the plunge halted right at the rising short-term trendline, given the momentum of the decline traders shouldn’t enter new positions here.
The long-term setup remained negative in ETH’s market, and odds continue to favor the continuation of the bear market, and even in the case of a quick recovery, traders should only consider smaller, speculative positions with strict risk management rules just as in recent weeks. Support is now found near $130, $112, and in the key long-term $95-$100 zone.
BTC/USD, 4-Hour Chart Analysis
Bitcoin topped its January swing low before the crash, but it remained shy of its December high and the key $4450 resistance despite yesterday’s clean break-out. The failed break-out pattern in the most valuable coin is a negative sign for the whole segment, and barring a quick recovery above the strong $4000-$4050 resistance zone, traders shouldn’t enter positions here.
While a move towards $4450 is still possible, with the rising weak short-term trendline still being intact, the sudden violent sell-off and the still hostile long-term technicals warrant caution here even regarding short-term speculative positions. today, and with the short-term trend still clearly being bullish, a move towards the $4450 price level seems likely. Support levels are now found near $3600 and just above $3450, while primary resistance is currently ahead near $3850.
Ripple Plunges Below $0.30 as Litecoin Tests $44 Support
XRP/USDT, 4-Hour Chart Analysis
Ripple remains very week compared to the broader market, and it fell together with its peers today despite missing out on the bulk of the counter-trend rally. The test of the $0.28 and $0.26 levels continues to be likely, and the coin is still on sell signals on both time-frames in our trend model.
The $0.30 support/resistance level is back at the center of attention, with key resistance zones now ahead near $0.32, $0.3325, $0.3550, and $0.3750, and traders and investors should stay away from the coin until we see signs of technical strength.
LTC/USD, 4-Hour Chart Analysis
Litecoin has been showing relative weakness in recent days and although it managed to hit marginal new swing highs, today the coin crashed below the strong $44 level amid the market-wide sell-off. While the coin has been leading the way higher during the counter-trend move, the long-term setup remained clearly bearish, and odds still favor the continuation of the bear market.
Primary short-term resistance is now ahead near, while the line-in-the-sand $38 level provides support below $44. The rising short-term trendline is now broken and our trend model is on sell signals on both time-frames.
EOS/USD, 4-Hour Chart Analysis
EOS turned lower after touching the target zone near $4.50, and despite the sharp sell-off, it remains above the steeply rising short-term trendline. Although the relatively strong coin found support near $3.50, traders shouldn’t enter new positions here, as today’s bearish momentum, together with the negative long-term outlook point to increased downside risks. Support levels below $3.50 are now found near $3 and $2.80, while resistance is ahead near $3.80 and $4.
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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.