The cryptocurrency segment continues to be dominated by bulls, with the major coins extending their recent rally, despite the still bearish long-term technicals. While Bitcoin has been leading the way higher for weeks, yesterday, the tide turned and altcoins gathered relative strength in the wake of the parabolic move by the most valuable coin.
BTC/USD, 4-Hour Chart Analysis
Despite Sunday’s reversal and the overbought momentum readings, Bitcoin managed to extend its rally above the weekend high, further squeezing shorts following the recent parabolic move. We expect the coin to enter at least a deep correction in the coming days, and despite the intact short-term uptrend traders shouldn’t enter new positions at these levels.
Above the recent swing high further resistance is ahead near $9200, while support zones to watch are now found near $7800, $7600, and $7000 and a pullback below the structurally important $5850 could is still likely after the rally runs its course.
XRP/USD, 4-Hour Chart Analysis
Ripple, which has been the weakest top coin for months, despite its several furious, but brief rally attempts, produced another spike higher, triggering a short-term buy signal in our trend model. The coin surged as high as the lower boundary of the long-term support/resistance zone between $0.42 and $0.46 before dipping back below $0.40 in late trading as the market entered a pullback.
The coming days will be crucial for the coin and for the segment, and with the other majors being in overbought territory following the lengthy counter-trend move, yet another failed hike is likely in the market of XRP. Above $0.46, the next major resistance levels are ahead near $0.51 and $0.54, while support below $0.40 is found near $0.3750, $0.3550, and just above $0.33.
While the rally might still continue here, most of the leading top coins are overbought now, and despite the gains of the recent days, they remain a bear market from a long-term perspective, and downside risks are very high regarding the coming weeks. Even if the majors are forming a long-term bottom, the current conditions are not favorable for entering new positions.
Ethereum Extends Rally as Litecoin Gets Stuck Below Swing high
ETH/USD, 4-Hour Chart Analysis
While Ethereum has been showing relative strength today, it only managed to hit marginal new rally highs, and downside risks remain high in the coin’s market. Our trend model remains on sell signals on both time-frames, despite the volatile rally of the past two days, and traders shouldn’t enter new positions here,
Following the extended counter-trend move, we still expect the bearish long-term forces to overwhelm the bullish short-term momentum, even though a push to $230, marking the next major resistance zone is still possible here. The $200 support provides the first line of defense for bulls here, with further long-term levels near $180 and $160, and with a short-term support zone found near $185.
LTC/USD, 4-Hour Chart Analysis
While Litecoin has been one of the leaders of the broader counter-trend move, and it also spiked higher together with Bitcoin last week, it has been relatively weak today, remaining below its recent swing high. Our trend model also remained on a short-term sell signal due to the overbought short-term momentum readings, and although another push above the recent swing high is possible, downside risks are now very high in LTC’s market.
The coin is currently trading right at the upper boundary of the $85-$90 support/resistance zone, eyeing a test of the April high near the $100 price level. Below $85, support is now found between $72.50 and $75, with a crucial long-term zone at $64, while further resistance is ahead just above $100 and near $110.
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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.