Crypto Update: Shorts Get Squeezed As Coins Pump & Dump

The major cryptocurrencies had a crazy Friday and early Saturday, as, after recovering above their recent breakdown levels, they surged above several key resistance levels in the usually illiquid period. The classic short squeeze saw BTC spiking briefly above $10,000, ETH surpassing $200, and XRP reaching  $0.3150, but the top coins quickly gave back a large part of their gains today, and the rally is still very likely to prove to be only a counter-trend move.

That said, our trend model switched to short-term buys signals in some cases, and the fact that BTC has been the leader of the move could mean that a larger-scale correction begun. While the bearish long-term trend is still apparent in the segment, traders could enter new short-term positions in the relatively stronger coins on the retest of the key resistance levels in play.

BTC/USD, 4-Hour Chart Analysis

BTC completed a failed breakdown pattern with surpassing the $7,800 level, and the move triggered a short-term trend change and an epic short squeeze in the coin’s market and across the segment. The coin surged past several key resistance levels, triggering stop-loss orders which further fueled the rally in the usually thin environment. The coming days will be crucial in deciding the extent of the correction but BTC is now on a short-term buy signal, with all eyes on the $9,200 price level.

The coin is still on a long-term sell signal in our trend model, with support zones now found near $8,650, $8,400 and $8,200, and with further resistance ahead near, $10,000.

ETH/USD, 4-Hour Chart Analysis

While ETH surged higher together with BTC, clearing the $180-$185 zone and even the $200 level, it gave back most of its gains and fell back below the key resistance zones. The coin could still resume the move, and should it form a swing low and recapture the $185 level, a nuy signal would be triggered.

Our trend model is still on sell signals on both time-frames, with support zones now found near $160, $145, and $130, and with resistance zones ahead between $180 and $185 and near $200.

XRP And LTC Fail To Impress

XRP/USD, 4-Hour Chart Analysis

XRP briefly passed the $0.30 level amid the segment-wide surge but the recenly leading coin failed to maintain its breakout. That left XRP below its rising trendline and the coin’s technical setup is unchanged. A sustained new high would be great news for bulls, but for now, traders should remain defensive here.

XRP is still on sell signals on both time-frames in our trend model, with support zones now found near $0.28, $0.26, and $0.2475, and with resistance zones ahead near $0.30, and $0.32.

LTC/USD, 4-Hour Chart Analysis

LTC briefly topped the upper boundary of its prior trading range but the quick pullback to the zone left the bearish technical setup unchanged, despite the failed breakdown pattern. The $56 level is back at the center of attention, and while a more prolonged counter-trend rally is possible, the dowtrend is still likely to continue.

LTC remains on sell signals on both time-frames in our trend model, with resistance zones now found near $51 and $44 and with major resistance zones ahead near $56 and $64.

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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.