Crypto Update: Short-Term Swing Low Forming?

After the two-day rout that kicked off the week, the major cryptocurrencies continue to trade in a very volatile manner, with several wild swings in both directions in the last 24 hours. Most of the top coins held up above the initial spike lows of yesterday, although Bitcoin fell to a marginal new low later on Tuesday.

While selling pressure remains apparent in the segment, the volatile consolidation is likely a part of a short-term bottoming process, which could set up a more sustained bounce following the selling panic. The most important reference price levels for short-term traders are the $4450 level in Bitcoin and the $130 level in Ethereum.

Despite the possible bounce, the long-term setup in the segment is still overwhelmingly bearish, and any new positions should be considered ultra-short-term, and traders should apply strict risk management.  With the strong bearish leadership still clearly present, even in the case of a durable bottom, an extended period of volatile consolidation will likely precede a confirmed trend change.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still trying to form a short-term swing low, despite being relatively weak in the past 24 hours from a technical perspective, and the $4450-$4500 support zone remains in the center of attention. The coin got close to the $4000 level during yesterday’s volatile spikes, with the initial bounce topping out just above the $4700 resistance level.

Further levels of interest are ahead near $5350 and $5600, while primary support is still found between $4000 and $4050, and traders should still only consider very short-term positions in BTC. Volatility will likely remain very high in the coming period and the long-term sell signal is clearly in place in our trend model.  

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to hold above its initial spike despite falling back below the $130 level several times yesterday. The coin is showing early signs of stability, but given the steep long-, and short-term downtrends and the extended period of relative weakness, traders and investors would need significant technical improvements to consider new positions in ETH.

That said, playing a bounce to the $150-$160 zone is likely in the coming period, with even the previous bear market low near $170 possibly in sight after the rout, but odds still favor at least a test of the recent lows before a sustained rally.

Ripple Still Strong as Stellar Tests Support Zone

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to hold above the key $0.42-$0.46 long-term support zone, clearly being the strongest among the majors from a technical standpoint. Despite that, our trend model is still on a sell signal with regards to the short-term time-frame, and the coin’s relative strength have been waning somewhat in the past couple of days, so traders should still not enter new positions here. Further support levels are still found near $0.375 and $0.355, with resistance ahead at $0.51, $0.54, and $0.57.

Stellar/USD, 4-Hour Chart Analysis

Stellar got dragged significantly lower by the latest round of the segment-wide crash, and although it held up above the prior bear market low, the short-term setup is still clearly bearish in the relatively strong coin’s market as well.

The long-term picture is neutral and the support zone between $0.1830 and $01930 is still looking strong, but traders and investors shouldn’t enter new positions here, with strong resistance ahead at $0.21 and between $0.2350 and $0.2450.

LTC/USD, 4-Hour Chart Analysis

One of the bearish leaders of the segment, Litecoin also showed signs of stability yesterday, and that’s positive news for the whole market, at least concerning the short-term outlook. The coin managed to hold on above the initial spike low, and although it’s still stuck below the $34.50 resistance level, a larger bounce could be ahead, possibly up to the $38 level. That said, the broader downtrend is clearly dominant and there is still no sign of a sustained bottom in the market of LTC.

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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.