Bitcoin Price Holds Near $3,800; On Track to Outperform S&P 500 This Month

Following last week’s rally the crypto segment entered a short-term pullback, but for now, the move halted and the top coins might already be forming swing lows. The major cryptocurrencies cleared the overbought short-term momentum readings but remained above the key support levels that we have been monitoring. Although further consolidation is possible in the illiquid holiday environment, the short-term outlook remains positive.

While the most overbought coins got downgraded to neutral in our trend model ahead of Christmas, now, traders could already enter positions, anticipating another leg higher in the counter-trend rally. Despite the current move higher the long-term picture is clearly bearish in the segment, and as the long-term oversold readings are already being cleared, traders should still only treat new positions as short-term trades.

BTC/USD, 4-Hour Chart Analysis

Bitcoin dipped below $3700 during the correction, but it remained above the key $3600 support level and it’s still on a short-term buy signal in our trend model. Volatility and trading activity remained low after the sharp pullback, and the pullback might already be over.

All eyes are now on the $4000-$4050 resistance, and a new swing high would likely trigger a move up to the $4450 resistance. Another strong zone is ahead between $5000 and $5050, while further support is found near $3250 and $3000, and traders could still play the counter-trend rally here.

ETH/USD, 4-Hour Chart Analysis

Ethereum almost touched the key $160 resistance level before dipping below the $130 level during the pullback. The coin remained above the $120 level and well clear of the strong $95-$100 zone, and the short-term uptrend is intact.

Out trend model is now back on a short-term buy signal, as the coin cleared the overbought momentum readings, and a test of the prior swing high is likely in the coming week, even as the long-term picture remains clearly bearish.

Altcoins Mixed as Correlations Tick Lower

Dash/USD, 4-Hour Chart Analysis

Although most of the majors are trading in similar patterns, the very strong correlations that we saw in recent months broke down somewhat, which supports the continuation of the counter-trend rally. Most of the majors broke the steep short-term uptrend lines, entering consolidation patterns, and the coins have been hovering near key support levels, with bulls eyeing the prior swing highs.

LTC/USD, 4-Hour Chart Analysis

Litecoin has been one of the leaders of the rally so far, and after surpassing the $34.50 target, the coin turned sharply lower, already testing the $30-$30.50 support/resistance zone. The short-term momentum indicators are now neutral, and the coin could already be ready of move back towards the $34.50 level, and a rally up to $38 is possible in the coming weeks. The coin is once again on a short-term buy signal in our trend model, even as the long-term downtrend is clearly intact.

XRP/USDT, 4-Hour Chart Analysis

Ripple failed to remain in the key long-term $0.42-$0.46 support/resistance zone despite the strong rally, and the coin fell below the $0.3750 support as well after turning lower together with the broader market.

While short-term, XRP is showing relative weakness, it’s back on a short-term buy signal in our trend model, although the long-term sell signal is in place. XRP needs to stay above the primary support level near $0.3550, with further support levels at $0.30 and $0.32 and a weaker resistance level ahead at $0.40.

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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.

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