Cryptocurrencies are retreating from their strong rallies lately, but are these merely corrections?
Or are trend reversals taking place?
Bitcoin bulls are still on break mode, and bears might jump on this opportunity to spur a reversal!
Price is forming a head and shoulders chart pattern on its 4-hour time frame but has yet to break below the neckline support to confirm that a downtrend would follow. If that happens, bitcoin could fall by at least the same height as the reversal formation, which spans around $10,000.The 100 SMA is still safely above the 200 SMA, though, so the path of least resistance is to the upside. At the same time, Stochastic is climbing out of the oversold region to confirm the presence of bullish momentum.
Ethereum also seems to be in the mood for a selloff since the price recently fell through a short-term ascending trend line. It has since completed its retest of the broken support and is setting its sights on the next downside targets.
The Fibonacci extension tool shows the levels that sellers are eyeing, with the 50% level lining up with the swing low and possibly serving as a take-profit point. Stronger selling pressure could take ETH down to the 61.8% level at $886 or the full extension at $723.
Stochastic is pointing down to confirm that sellers have the upper hand while the moving averages might be attempting a bearish crossover.
Litecoin is in the middle of a major correction as price sold off sharply upon hitting the $185 mark.LTC is hanging out around the 38.2% Fib support, but Stochastic suggests that a deeper pullback is in order. Price could still dip to the 61.8% level that coincides with a former resistance level at $96.
The 100 SMA is still above the 200 SMA to hint that bulls might be able to defend the Fib retracement levels and allow litecoin to recover to the swing high.
Things might finally be looking up for XRP as an inverted head and shoulders pattern is forming on its 4-hour time frame.
A break above the neckline resistance around 0.3000 needs to happen before an uptrend gains traction, but this reversal could potentially climb by roughly the same height as the chart formation.
The moving averages have yet to make a bullish crossover to confirm that an uptrend is in order, but Stochastic has plenty of room to head north before reflecting exhaustion among buyers.
If this is your first time checking out crypto charts, keep in mind that there is a considerable amount of risk in trading cryptocurrencies due to their inherent volatility and sensitivity to headlines. Be careful out there!