Bitcoin price weakness could spark wider crypto sell-off
Recent bitcoin losses appear to be leading bitcoin cash, litecoin and ether into a potential impending decline.
Are we due another leg lower for crypto prices?
The past month has seen many of the major cryptocurrencies head higher, with a sharp spike in bitcoin helping improve sentiment across the board. However, the wider bearish picture seen throughout prior months still holds a theme that is yet to be negated. With prices for bitcoin, bitcoin cash, ether, and litecoin all consolidating, are we due another leg lower or will we soon build on that recent rally?
Bitcoin prices drifting lower
Bitcoin prices have been drifting lower since the late-October spike, following a rally into the region of the 76.4% Fibonacci resistance level. There are two signs in play here, with both bullish and bearish elements. On the bearish side, it is worth noting that we continue to create lower highs, with that bearish trend in play since the highs of $13,853 from June. We would need to see a break through the $10,940 level to bring about a renewed bullish outlook for bitcoin.
However, looking at the four-hour chart, we have a shorter-term trend to follow, with the standard deviation channel highlighting that recent decline. The huge disparity in the rate of decline against the rate of acceleration in late October. With that in mind, there is a good chance that this pullback is a precursor to another leg higher. Watch for a break through the $9543 as a bullish breakout signal.
Bitcoin cash in similar bearish trend
We have seen a similar wider bearish trend in place for bitcoin cash, with the recent rally taking the price back into the 76.4% Fibonacci resistance level. A break through the September peak of $333 would bring about a wider bullish picture. However, until that happens there is a strong chance we will see another break lower for bitcoin cash before long. Look out for a break below $270 support to bring about a head and shoulders formation and signal a wider bearish picture coming back into play once more.
Litecoin price also showing weakness
We are seeing a similar sign of impending weakness from the litecoin chart, with the price currently trading back at trendline support. The resurgence we have been seeing since the late-September low appears to be a retracement of the prior decline. As such, there is a strong chance that we will see litecoin break lower before long. Perhaps we will see trendline support hold up once more, yet it is worthwhile noting that a drop below $59 would bring about a likely continuation of that wider bearish trend once again.
Ether price is in symmetrical triangle formation
Ether has similarly been on the rise, yet the price has now moved into a symmetrical triangle formation. The ascending lows still remain in play, yet a breakdown below the latest low would begin to tell a more bearish story. For the first signal, watch for a potential break out of this triangle formation to give us a clue of where ether goes from here. To the downside, a break below the $181 level would be required to bring about a short-term bearish reversal signal.
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