Crypto Update: Sunday Rally Fizzles as Momentum Weakens

After recovering well from Friday’s steep sell-off over the weekend, the major cryptocurrencies started the week in a bearish fashion. Ethereum and Ripple have been leading the way lower today, and although Bitcoin remains stable, given the bearish long-term pressures, downside risks are still very high here.

That said, the rising short-term trends are intact in most cases, and even as the bullish momentum is clearly weakening we still can’t rule out another wing higher. While our trend model is on short-term buy signals in case of several of the majors, traders should still only consider smaller, speculative positions even in the relatively stronger coins, as the odds of a deep and sustained sell-off our high in the coming weeks.

A broad move below the key short-term support levels could lead to a sharp dip following the lengthy counter-trend move and the recent parabolic rally, so applying strict risk management rules is a must here.

BTC/USD, 4-Hour Chart Analysis

Bitcoin continues to trade in a bullish consolidation pattern, despite Friday’s flash crash, and even though the coin failed to break out above its recent swing high, it’s holding up above the key $7600 level, retaining its short-term buy signal in our trend model. Despite the current stability, the relatively strong coin is also facing downside risks, and we continue to expect a move towards the long-term support/resistance zone near $5850.

In the case of a move below $7600, the coin will likely test last week’s swing low near $7000, while a move above $8400 would open up the way to the $9000 and $9200 resistance levels. Traders could still play the short-term trend her, but in the wake of the recent parabolic advance, the odds of a sustained move higher are slim. Further support is still found near $6750, $6500, $6100, and $6000, and our trend model is still on a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been testing its steeply rising short-term trendline again today, but the short-term pattern remains bullish, despite today’s dip, and our trend model is still on a short-term buy signal. The coin is among the relatively stronger majors from a short-term perspective, and with the pattern of higher highs and higher lows being intact, the counter-trend move might still continue.

With the long-term technicals being bearish, traders should only consider short-term positions with strict risk management here, as we still expect the bear market to resume. Long-term levels to watch below the current price range our found near $230, $, while resistance levels are ahead at $160, $275, $300, and, $330.

No Significant Bullish Follow-Through Among Altcoins

XRP/USD, 4-Hour Chart Analysis

Ripple remained volatile after Friday’s pullback, and even though it briefly topped the lower boundary of the crucial long-term zone between $0.42 and $0.46 yesterday, it’s now back well below the $0.40 level, failing to show bullish follow through. Our trend model flipped back to a short-term sell signal, due to today’s dip, and we still urge traders to focus on the relatively stronger coins, despite the alluring volatility of XRP.

The coming days could be crucial for the coin and the whole segment, but given its apparent long-term relative weakness, odds are firmly in favor of another leg lower in the bear market following the broad segment-wide counter-trend move. Above $0.46, further resistance is ahead near $0.51 and $0.54, while support is now found near $0.3750, $0.3550, and just above $0.33.

LTC/USD, 4-Hour Chart Analysis

Litecoin remained relatively weak during yesterday’s rally, and today, the coin fell back inside the $85-$90 support/resistance zone, after failing to trigger a short-term buy signal over the weekend. Despite its current weakness, LTC is holding up in a short-term uptrend, but until we see signs of relative strength, traders should avoid entering even smaller positions here, due to the bearish long-term pressures.

Below the initial zone, further support zones are found between $72.50 and $75, and near $64, while resistance is ahead just above $100, near $110, with strong long-term one near the $125 price level.

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.