Despite the bullish sentiment surrounding the Bitcoin’s halving, multiple technical indicators suggest that Ethereum, XRP, and Litecoin are headed for a leg down after the recent market surge.
- Ethereum got rejected by the upper boundary of a parallel channel where it has been contained for a while, which could result in a drop to the lower boundary of the channel at $175.
- Meanwhile, XRP may pull back to $0.20 after not being able to move past the massive resistance ahead.
- Litecoin, on the other hand, sits on top of a major support cluster that might be hard to break.
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Investors appear to be exiting their long positions as Ethereum, XRP, and Litecoin signals point to a steep correction.
Nearly $50 billion flooded the cryptocurrency market over the past two days, allowing most digital assets to post significant gains. However, a significant number of investors appear to be exiting their long positions, particularly for altcoins.
Ethereum Gets Rejected by Strong Resistance
Following the March market meltdown that saw Ethereum plunge as low as $90, its price has since been contained within an ascending parallel channel.
Consistent with the characteristics of a channel, each time ETH rises to the upper boundary of the channel, it drops down to hit the lower boundary, and from this point, it bounces back up again.
Now that Ether surged over 15% in the past 36 hours, it met the overhead resistance once again.
Since Mar. 13, this barrier was able to reject ETH from advancing further. As a result, Ethereum could be preparing for a steep retracement to the middle or the bottom of the parallel channel.
The TD sequential indicator on ETH’s 1-day chart adds credence to the pessimistic outlook. Currently, this technical index is on a green eight candlestick and will soon present a sell signal in the form of a green nine candle.
Such a bearish formation suggests that Ether may be bound for a one to four candlesticks correction before a continuation of the uptrend.
A spike in the selling pressure behind Ethereum could see it fall to the 23.6% or 38.2% Fibonacci retracement levels.
These support walls sit right around the middle line and lower boundary of the parallel channel previously mentioned at $195 and $175, respectively.
The high levels of volatility in the cryptocurrency market make it hard to ignore the possibility of a further upwards advance. Thus, the recent swing high of $227 represents an important resistance level for bulls to pay close attention to.
A daily candlestick close above this price hurdle will signal a breakout from the month-long ascending parallel channel, which is extremely bullish. Under such conditions, Ether would likely aim for a new yearly high of $312 or even $360.
XRP Validates Another Sell Signal
Ripple’s XRP enjoyed an impressive rally over the past two days. During this time, XRP surged over 20%, going from a low of $0.195 to hitting a high of $0.236 today.
Crypto Briefing warned investors about the strength of a strong supply zone given by the 100 and 200-day moving averages. As predicted, this resistance area was able to hold, putting a stop to the bullish momentum seen in the last few days.
Now, the cross-border remittances token appears to be moving past its 100-day moving average, which may result in a drop to the 50-day moving average. This support level is currently hovering around $0.19.
Based on historical data, the TD sequential index has been able to anticipate local tops throughout the past month on XRP’s 4-hour chart. Yesterday, for instance, it presented a sell signal in the form of a green nine candlestick.
Even though this crypto rose by nearly 6% after the sell signal was given, today’s price action seems to validate the forecast this index predicted.
By averaging the most significant corrections the TD setup has been able to forecast over the past month, one could argue that XRP is bound for a 10% correction.
A 4-hour candlestick close below the $0.216 support level would likely validate the bearish outlook. If momentum picks up, XRP could fall to the $0.2 support level, meeting the target previously mentioned.
Playing the devil’s advocate, however, one could argue that an increase in the buying pressure behind XRP might be able to invalidate the pessimistic outlook.
If the cross-border remittances coin closes above its 200-day moving average, it could continue rising towards $0.27 or higher.
Bears Attempt to Take Control of Litecoin
Since Black Thursday, Litecoin has fared slightly worse than Ethereum and XRP. While Ether and XRP saw gains of over 115%, Litecoin only saw gains of 105%.
Now, this altcoin is trying to redeem itself by breaking above the 100-day exponential moving average, but this resistance barrier may continue to hold and reject it.
Indeed, the TD sequential indicator estimates that Litecoin is poised to pull back.
Yesterday, this index presented a sell signal in the form of an aggressive 13 candlestick. And today, it is presenting a sequential 13 candle. When combined with the upcoming green nine candlestick, the odds for a downward impulse increase greatly.
For the bears to take control of Litecoin’s price action, they would have to break through the massive support cluster ahead. This barrier is defined by the 50-day exponential moving average, the rising trendline, and the 23.6% Fibonacci retracement level.
A daily candlestick close below this area may benefit the bears greatly. In such a scenario, LTC will likely drop to $38.
Nonetheless, if the bulls capitalize on the current dip, the buying pressure behind Litecoin may increase. If so, the bullish momentum could be strong enough to break the resistance given by the 100-day exponential moving.
Closing above this barrier may see LTC surge towards the 200-day exponential moving average at $54.
Crypto Markets Moving Forward
The high levels of speculation around the upcoming Bitcoin halving pushed the entire market into a period of exuberance and high volatility. Such erratic behavior is evidenced by long and short BTC liquidations, of which $230 million were closed on BitMEX in the last two days.
Even though wild price movements can be highly profitable for many, they can also blow up a trader who does not have a solid risk management strategy. During these times, the best way to avoid adverse market conditions is to use little to no leverage or stay out trading.
Eventually, the crypto market will return to normal and offer better opportunities to profit with lower risk.