Ethereum, XRP, and Litecoin appear to have reached an exhaustion point following the uptrend they entered since the beginning of the year. Now, a technical index estimates that these cryptocurrencies could be bound for a correction before the continuation of the bullish trend.
Ethereum is about to pull back
Ethereum went through rally that saw its price surge over 40 percent since Jan. 3. This cryptocurrency went from trading at a low of $126 to a high of $179 on Jan. 18. Despite the recent bullish impulse, ETH seems to be preparing for a pullback at the moment.
The TD sequential indicator is currently presenting a sell signal in the form of a green nine candlestick on ETH’s 3-day chart. This technical index estimates that Ethereum could retrace for one to four candlesticks or begin a new downward countdown. A red two candlestick trading below a preceding red one candle could validate the bearish formation.
Although a correction seems imminent, Ethereum is contained within a reasonable no-trade zone. This area is defined by the 50 and 100-three-day moving averages, which are serving as support and resistance, respectively.
Closing below the support level could validate the bearish signal presented by the TD sequential indicator triggering a steep correction. Meanwhile, a spike in the buying pressure behind this cryptocurrency that allows it to break above resistance could take it to the 150-three-day moving average, at $195.
If Ethereum is indeed bound for a bearish impulse, it could plunge to the 61.8 percent Fibonacci retracement level that sits at $164.65. A further increase in sell orders could take ETH down to the next level of support around the 50 percent Fibonacci retracement level at $155.
XRP presents ambiguous outlooks
The moving averages on XRP’s 1-day chart formed a golden cross. As the 7-day moving average crossed above a 30 and 50-day moving average, the potential for a significant bullish breakout increased.
Now, the 30 and 50-day moving averages are also about to form another golden cross. Many investors see this technical pattern as one of the most definitive and robust buy signals that could start a prolonged uptrend.
Even though the moving averages crossover estimates higher highs for XRP, the TD sequential indicator is presenting a sell signal. The bearish formation was given in the form of a red nine candlestick, which could push the price of this crypto down for one to four candlesticks.
Due to the ambiguity about the future market valuation of XRP, the Fibonacci retracement indicator can be used to determine where this cryptocurrency could be heading next.
An increase in supply could push XRP below the 61.8 percent Fibonacci retracement level at $0.22. Such a bearish momentum could be followed by a steeper decline to the 50 or 38.2 percent Fibonacci retracement levels. These levels of support sit at $0.21 and $0.20, respectively.
Conversely, a spike in demand that takes this cryptocurrency above the 78.6 percent Fibonacci retracement level could allow it to advance even further. Closing above this significant level of resistance could take XRP up to $0.25 or $0.27. This is where the 100 and 127.2 percent Fibonacci retracement levels sit, respectively.
Litecoin is slowing down
The recent 62 percent rally that Litecoin went through allowed the 7-three-day moving average to cross above the 30-day moving average on the 3-day chart. This moving average crossover is known as a golden cross, which is a bullish technical pattern. Although the moving averages are considered lagging indicators, this technical formation estimates that a long-term uptrend could be developing.
Despite the bullish outlook presented by the golden cross, the TD sequential indicator is currently forecasting a pullback. This technical index is giving a sell signal on LTC’s 3-day chart. The bearish pattern stipulates that Litecoin would likely correct for one to four candlesticks before a possible continuation of the uptrend. A red two candlestick trading underneath a preceding red one candle could confirm the downward momentum.
Closing below the 78.6 percent Fibonacci retracement level could add credibility to the bearish scenario. If this happens, then Litecoin could plunge to the next levels of support around the 61.8 and 50 percent Fibonacci retracement levels. These support zones sit at $53 and $49, respectively.
Nevertheless, an increase in volume that pushes Litecoin above the recent high of $63 could jeopardize the pessimistic perspective. Such an upswing may take LTC to a new yearly high of $70 or $74.
Overall sentiment
Over $56 billion were injected into the cryptocurrency market since Jan. 3. The sudden inflow of capital allowed many cryptos to surge exponentially, including Ethereum, XRP, and Litecoin.
Now, investors seem to be taking profits from the recent rally, which could trigger a retracement. A pullback from the current price level would allow sideliners to re-enter the market. A new wave of fresh capital could push the price of these cryptocurrencies into higher highs.
The idea of a further advance aligns with the CEO of Bitcoin Suisse Arthur Vayloyan’s 2020 outlook. Vayloyan maintains that Bitcoin and other digital assets “will go up” throughout the year as the network continues expanding, and more investors join the space.
Posted In: Ethereum, Litecoin, XRP, Technical Analysis
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