While the major cryptocurrencies are holding on to a large part of their gains from last week, the short-term pullback in the segment continued in the past 48 hours. The top coins dipped below their Christmas lows yesterday, and although the losses were modest, the swing lows haven’t been confirmed yet. That said, we remain bullish regarding the short-term outlook, and we still expect the counter-trend rally to continue, even as the long-term picture remains overwhelmingly bearish.
IOTA/USD, 4-Hour Chart Analysis
Short-term traders should still play the long side in the current environment, even though from a broader perspective at least a test of the lows is likely, and strict risk management rules should be used given the counter-trend nature of the move. Traders should pay special attention to the leaders of last week’s rally, such as Litecoin, Ethereum, IOTA, and Ripple, since their relative strength or weakness will be an important clue for the whole segment.
The leaders are now back above their Christmas lows and the price action is still consistent with a more sustained rally attempt in the segment. The short-term consolidation is still ongoing, with no new swing highs among the majors, and our trend model is still on short-term buy signals in most cases.
BTC/USD, 4-Hour Chart Analysis
Bitcoin tested the key $3600 support level before today’s rally, and it continues to show slight relative weakness compared to the leaders of the move. The coin is still well off the previous swing high near $4200, but we expect a new bullish swing and a likely test of the resistance zone near the $4450 price level in the coming period. Another strong resistance zone is ahead between $5000 and $5050, while further support is found near $3250 and $3000.
ETH/USD, 4-Hour Chart Analysis
Ethereum dipped below $115 before a strong rebound on Friday, but it remained on a short-term buy signal as it has been holding on to most of its recent gains, showing relative strength compared to most of its peers.
ETH is now close to taking back the second position in the list of the most valuable coins, and given its recent strength, it could top the key $160 level in the coming week, even as the bearish trend is clearly intact, with support zones found near $130, $120, and between $95 and $100.
Litecoin Resumes Rally as Ripple Shows Weakness
LTC/USD, 4-Hour Chart Analysis
Litecoin recovered above the $32 level after briefly violating $30 support, and although it is still stuck below the recent swing high near $36, the short-term trend will likely continue. Our trend model is still on a short-term buy signal after the pullback and we now expect a test of the $38 resistance, even though the oversold long-term momentum readings are quickly getting cleared.
XRP/USDT, 4-Hour Chart Analysis
Ripple also dipped below primary support near $0.3550 before the rebound, and the coin is still relatively weak compared to its major peers. XRP remains on a short-term buy signal, but given its weakness, traders should be cautious with opening new positions, and rather focus on the stronger coins for short-term trades.
The key long-term $0.42-$0.46 support/resistance zone could be tested in the coming week, but another strong resistance level is found just above the current price level near $0.3750, with a weaker level ahead at $0.40, and with further support at $0.32 and $0.30.
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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.