Long-Term Cryptocurrency Analysis: Correction Risk Rises as Coins Spike Lower
It’s been a great ride for the crypto segment in the last one and a half months, as the summer correction soon transformed into a monster rally in most of the majors. Bitcoin, which emerged from the Fork-day stronger than ever, led the surge, but the rest of the market joined the party soon. As we already warned traders, the majority of the largest coins are now in overbought territory after the several 100% of gains, and today’s spike could be the beginning of a deeper market-wide correction. BTC hit a new all-time high near $5000 this week, but the momentum of the move wasn’t too convincing, and the currency is likely in the process of forming a durable top, on the heels of the lofty gains.
BTC/USD, Daily Chart Analysis
The likes of Monero, Dash, and Litecoin are also after huge rallies, and much more favorable entry points are likely to emerge in the coming weeks. That said, Ripple, Ethereum Classic, NEM, and NEO are in different stages of the cycle and they could still deliver meaningful returns. In the case of the overbought currencies, long-term investors should take a step back and wait until the current skewed sentiment turns more negative and the coins clear the overbought condition. Let’s see how the daily charts look this weekend.
ETH/USD, Daily Chart Analysis
Ethereum hit our target at $380 this week, but it topped out just below its prior all time high near $400 for now. The coin is getting overbought now after the recovery rally, and it might miss out on a new all-time high during this leg of the bull market. Strong support is now found at $330, $300, and $285.
LTC/USD, Daily Chart Analysis
Litecoin finally provided the break-out that we have been expecting and it even surpassed all of the long-term targets for the move. The coin is now deeply in overbought territory, and long-term investors shouldn’t open new positions here, although another push to new highs is possible in the coming days. Strong support is now found at $72, $64, and at $60 and near $56.
XRP/USDT, Daily Chart Analysis
Ripple continues to lag the other majors, with the coin drifting lower following the declining long-term trendline. The currency broke below the $0.16 level, proving the short-term weakness again. While the long-term momentum is still neutral, the coin needs to hold above the $0.13 support, to maintain the long term uptrend. That said, investors could still add to their positions here, as another leg higher is more likely.
DASH/USD, Daily Chart Analysis
Dash most likely topped out just above the $400 level after the huge move from the July bottom near $120. The coin is clearly among the most overbought majors, and we expect a correction below $300 in the coming period, although the long-term uptrend is not in any danger. Key support levels are found at near $300, and at $265.
ETC/USD, Daily Chart Analysis
Ethereum Classic quickly surged to its prior all-time high after yesterday’s break-out and reached the $18, $20, and $23 targets in one move. The coin is still not overbought regarding the long-term picture and it could still be headed higher in the coming week, but volatility will likely be high, especially if the segment enters a broad correction.
XMR/USD, Daily Chart Analysis
Monero behaved very similarly to Dash recently, and the outlook is also the same for the coming period. We expect a deep correction after the monster rally, with the price dipping at least below the $100 level. The steep short-term uptrend is now broken and even short-term traders should be cautious with new positions. Crucial support levels are at $100, $80, and $68.
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)”
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