Bears are still on the prowl in the cryptocurrency world, spurring another leg lower for bitcoin and its peers recently. Another set of support areas held, but are we merely seeing corrections?
Bitcoin plunged below that area of interest we were looking at last week, tumbling all the way down to the bottom of the descending channel.
The $6,000 level held as support as expected, allowing price to bounce close to the mid-channel area of interest. If bitcoin keeps up its rebound, price could climb to the Fibonacci retracement levels all the way up to the channel resistance and $10,000 area of interest.
Stochastic is heading north after a quick stay in oversold territory, indicating that buyers are getting their mojo back. However, the 100 SMA is still below the longer-term 200 SMA and coincides with the channel resistance, so sellers could be waiting right there.
Ethereum also breached that support area from the previous week and is now starting a new trend lower. A correction is underway as well, with price currently testing the 50% retracement level.
A higher pullback could last until the 61.8% Fib, which is closer to the descending trend line and former support zone around $850. This is right smack in line with the 100 SMA dynamic inflection point, which is below the 200 SMA to confirm that the path of least resistance is to the downside.
Buyers already seem exhausted from the latest rally as stochastic is indicating overbought conditions. Turning lower could draw selling pressure back in and lead to a drop to the swing low.
Litecoin made a brief bounce since breaking below its symmetrical triangle pattern earlier on then proceeded to resume its selloff to the $107 levels.
This appears to be the bottom of a fresh descending channel forming on its 1-hour time frame, and it looks like another test of resistance around $150 is in the cards.
Price is already encountering a barrier at the 100 SMA dynamic inflection point, though, and the 200 SMA resistance is just close by. At the same time, stochastic looks ready to head back down and take litecoin with it.
A bit of fair warning, though. There is a considerable amount of risk in trading cryptocurrencies due to their inherent volatility and sensitivity to headlines. Be careful out there!