Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin is trading near the $200 after breaching the key support and getting close to the crash low around $180 in early trading as we expected. The currency remains among the weaker coins after its stellar rally, and we expect further corrective price action and new correction lows. Traders should stay away from entering new positions while investors could look for reversals near the key levels at $170, $125 and $100 to add to their holdings.

Ripple

XRP/USDT, Daily Chart Analysis

Ripple is trading between the crucial $1.25 and $1.50 levels after this morning’s sell-off, and the coin remains among the weakest majors, as the prior exponential surge weighs heavily on the market. That said, investors could be looking for entry points after the 70% decline top-to-bottom, near the key levels at $1.25, $1, and $0.85, as the correction runs its course. Traders, on the other hand, should wait with entering new positions as the strong short-term downtrend s clearly intact.

Dash

DASH/USD, Daily Chart Analysis

Dash plunged below the prior correction low today, as expected, and the coin still shows relative weakness despite the strong intraday bounce. While now the extreme overbought momentum readings are fully cleared, the currency could still face selling pressure following the earlier lofty gains. With that in mind, traders should wait for a short-term trend change before entering new positions, while investors could be looking for early entry points near the key support zones between $600 and $650 and $500.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic experienced a surprising rally as it followed Ethereum higher, and hit a marginal new all-time high amid the broad correction. Despite the move, the coin is still expected to re-visit the $23 level, the prior all-time high, before the end of this cycle, even after the recent consolidation phase.  Strong support levels are now found at $30, $25, $23, and $18, while primary resistance is ahead at $34.

Monero

XMR/USD, Daily Chart Analysis

While the relative strength that Monero has been showing recently is encouraging for the coming cycles, the coin is still looking overbought, and a deep correction is likely to follow. Investors should wait with adding to their holdings until the overbought readings are cleared, with key support zones near $300 at $240, $200, $180, and $150.

IOTA

IOTA/USD, Daily Chart Analysis

Given the exponential nature of the year-end rally in IOTA, the coin will likely experience further volatility and violent selling before a durable bottom is hit, although, in time, the currency is ahead of the rest of the majors in the cycle. The long-term MACD is now neutral, and we the key levels to watch are still found at $3, $2.35, and $1.50.

How to Use These Charts?

As we stressed in our article on Bitcoin: “…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here is a reminder of some of the possible strategies once again:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)”

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.

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.