Published on May 7th, 2019 📆 | 5769 Views ⚑0
Crypto Update: Ethereum Breaks Out as Market Remains Mixed
The cryptocurrency segment continues to show a mixed but surprisingly bullish short-term picture following last week’s negative period for altcoins. That said, even considering the technical improvements, we still can’t conclude that another broad push higher in the broader counter trend rally is underway, but more coins are now on short-term buy signals in our trend model, and most importantly, Ethereum managed to take out its declining short-term trendline today in US trading.
As for the negatives, Ripple remains very weak, while Litecoin, EOS, and Bitcoin are below their recent swing highs, but that lag could be just a sign of bullish rotation, and the early leaders of this rally could still be ready to join Ethereum’s push. While the short-term picture improved with Ethereum’s rally, the long-term setups in the segment remain negative, and traders should still only consider short-term positions here while using strict risk-management rules.
ETH/USD, 4-Hour Chart
Despite dipping below $160 and showing relative weakness over the weekend, ETH surged higher today, pushing over the declining trendline that developed in April. While the April high is still well above the current price level, the move was enough to trigger a short-term buy signal in our trend model, even though the other main altcoins didn’t join the rally.
A move above $180 would likely trigger a test of the $200 level, and even though the long-term setup remains hostile for ETH, and the breadth of the rally is still weak, traders could enter new short-term positions here. From a broader perspective, we expect the bear market to continue, with support levels still near $160, $145, and $130. Despite the current strength, downside risks remain high, so strict risk management rules remain important for traders here.
BTC/USD, 4-Hour Chart Analysis
While Bitcoin didn’t follow Ethereum higher today, it managed to hold on its short-term consolidation, and although the very strong $5850 resistance level just above the current range warrants caution, the short-term uptrend is clearly intact. BTC’s stability is the key to the sustainability of the market-wide rally, even considering today’s move by Ethereum, and until the most valuable coin manages to hold the uptrend, traders could trade the relatively stronger coins with smaller positions.
That said, given the proximity of the structurally important long-term resistance level, traders should remain cautious with BTC, and our trend model remains on a neutral short-term signal while being on a bearish long-term signal. Above $5850, the next levels to watch are near $6000 and $6100, but a durable breakout is highly unlikely here, and below the initial support zone near $5400 further zones are found near $4850 and $4450.
Litecoin Stuck Near $75
LTC/USD, 4-Hour Chart Analysis
Litecoin briefly dipped below the strong $72.50-$75 support/resistance zone in early trading, but the coin managed to climb back immediately, leaving the short-term buy signal in place in our trend model. Despite the recovery, the coin remains relatively weak from a broader perspective, traders should only enter smaller, speculative positions.
Even though the coin remains above the declining short-term trendline, it failed to show sustained bullish momentum, so downside risks remain high. Initial resistance is still ahead between $85 and $90 with another zone just above $100, while strong support is found near $64 and $56.
XRP/USD, 4-Hour Chart Analysis
Ripple failed to join Ethereum’s move yet again, and the coin remains stuck in a short-term downtrend within a hostile long-term technical pattern. The coin is still trading near the strong $0.30 support/resistance level, and while the $0.28 level is safe, for now, Ripple’s sustained relative weakness means that it’s vulnerable to a market-wide sell-off, and a quick move towards $0.26 would likely follow a break below $0.28.
Our trend model remains on sell signals on both time-frames, and only a push above $0.32 would trigger a short-term buy signal, with further resistance levels found just above $0.33, and near $0.3550. Below the August low near the $0.26 support, another strong zone is found near $0.23,
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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.