The cryptocurrency segment has been consolidating Friday’s Litecoin-led surge over the weekend, and although most of the major coins are holding on to the bulk of their gains, the follow-through move has been lacking momentum. That said, compared to the failed Ripple-led attempt two weeks ago, more coins are showing positive signs, and despite the pullback, several of the majors remain on short-term buy signals in our trend model, even as long-term techncials are still overwhelmingly bearish.
With that in mind, traders could enter short-term positions in the relatively stronger coins, but strict risk management rules should still be applied as there is no evidence that the bear market is over, and from a broader perspective, at least the test of the prior lows is still likely.
Also, while Ethereum has been performed relatively well since recapturing the $112 level during the surge, the top 3 coins continue to be suspiciously, and until we see further resistance levels break, the “one-day-wonder” scenario remains a possibility.
BTC/USD, 4-Hour Chart Analysis
While Bitcoin rallied briefly above the $3600 level that was in the center of attention for weeks in January, it failed to extend its rally during the failed Monday move, and the lack of bullish momentum is a negative sign for the whole segment. Despite the weakness, the short-term rally is intact from a technical perspective, but traders should remain cautious with BTC as the coin might form a failed break-out pattern, which could lead to a quick move below its prior trading range.
The coin remains on a clear long-term sell signal in our trend model, and although the short-term buy signal is also intact, traders should only enter small, speculative positions here, with the bearish long-term forces still being apparent.