Crypto Update: Sideways Drift Continues But Leaders Fail to Show Strength

The major cryptocurrencies haven’t been able to break-out from the short-term trading ranges that developed this week, and although a broad decline below the key support levels has been avoided, downside risks remain prominent. The prior leaders of the counter-trend rally, such as Litecoin, EOS, and Bitcoin hasn’t been able to show strength and that fact also warrants caution, especially with the pattern of higher highs and higher lows being broken in the segment.

EOS/USD, 4-Hour Chart Analysis

Despite the current stability, as the top coins are still close to their initial support levels, a broad sell-off could quickly accelerate, as the short-term trend could switch to bearish. Our trend model remains on sell signals on both time-frames, and even in the case of a recovery, traders should only consider smaller short-term positions here. We still expect the bearish long-term forces to overwhelm the short-term bullish momentum soon.

BTC/USD, 4-Hour Chart Analysis

Bitcoin is still holding up above the $7600 level, but as the most valuable coin couldn’t sustainably recapture the $7800 price level, downside risks remain high, despite the slightly oversold short-term momentum readings. With that in mind, traders shouldn’t enter new positions here until we see signs of broad technical strength in the segment.

A sustained move below $7600 could lead to a quick test of the $7000 price level, with further levels below that near $6750 and $6500, and the test of the $5850 level still seems likely in the coming weeks. In the case of a less likely recovery, short-term resistance levels are ahead near $8000, $8200, and $8400, and the next stronger resistance zone is ahead near $9200.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still trading well above the key long-term $230 support level, despite the failed rally attempts, and should the coin remain stable in the coming days, the counter-trend move might still continue. That said, in light of the hostile long-term technicals, odds favor a move below initial support, which would likely lead to the test of the $200 and $180 support levels.

A short-term downtrend is still not confirmed, but our trend model is on sell signals on both time-frames in the wake of the lengthy counter-trend move. Volatility and trading volumes remain low, but that will likely quickly change after a move out of the current short-term range. Above $250, resistance zones are still ahead near $260, $275, and $300, and traders should still not enter new positions here.

Ripple Spikes Higher while Litecoin Holds Above $100

XRP/USD, 4-Hour Chart Analysis

Although the previously leading altcoins remain weak, the notoriously lagging Ripple attempted a rally today, getting back up to the $0.42 level in the face of the slightly bearish segment-wide trends. While the rally attempt failed, for now, a durable recovery above $0.42 could lead to the test of the $0.46 level. Our trend model remains on sell signals on both time-frames but should Ripple show signs of bullish follow through, a short-term buy signal could be triggered.

Even in the case of a buy signal, traders should continue to focus on the relatively stronger coins, from a broader perspective, as XRP’s bear market will likely resume in the coming weeks, as the counter-trend rally runs its course in the segment. Initial support is found near $0.3750, with further levels near $0.3550, just above $0.33, near $0.32, and at $0.30, while resistance above $0.46 is ahead near the $0.51 price level.

LTC/USD, 4-Hour Chart Analysis

Litecoin continues to hold above the key $100 level, despite the market-wide weakness, and the coin is still in a short-term uptrend, giving hope for crypto bulls that counter-trend rally will resume. While the coin’s stability is a positive sign, should it dip below $100, and test the $85-$90 zone, the sell-off could accelerate, and a quick move towards $75 and $64 would be in the cards in a matter of days.

The long-term outlook is still bearish for LTC, and our trend model is still on sell signals on both time-frames. Above $100, initial resistance is ahead near $110, with further zones near $125, $140, and $150, and even in the case of a broad rally in the segment, traders should only consider small positions in the coin, with a focus on risk management, especially given the weakness of the other leaders of the recent rally.

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.

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.