Assessing chances of crypto market reversal

• Bitcoin price is forming bearish divergence on four-hour chart, hinting at a market reversal.
• Ethereum price could spike higher, but will follow BTC if things go south quickly.
• Ripple price recently rallied but is currently facing a declining trend line. 

Bitcoin price continues to play an important role in curbing unnecessary optimism in the market. The bearish outlook that has developed over the last few days could result in a steep correction. If successful, it will end the free reign some altcoins have been enjoying. Ethereum and Ripple have rallied to an extent but not as much as Lido DAO, Ethereum Classic and so on.

Bitcoin price ready to shock investors

Bitcoin price has produced yet another sell-signal, which is a bearish divergence. This technical formation occurs, when the asset produces higher highs but the momentum indicator, Relative Stregnth Index (RIS) in this case, produces lower highs.

This non-confirmity indicates that the momentum is declining despite prices rising and that Bitcoin price lacks underlying strength and could start to fall soon.

In addition to this sell-signal, investors can refer to the previous article that talks about the cyclical nature of Bitcoin and local top formations.

Taken along with the fact Bitcoin price is in a longer-term downtrend this could be signaling the start of a new down leg for the leading crypto. Investors need to be pay attention to $15,443 support level as the last line of defense, should a sell-off occur.

BTC/USD 4-hour chart

An invalidation of the bearish outlook will occur for Bitcoin price if it produces a four-hour candlestick close above $17,800. In such a case, BTC might attempt a retest of the $19,000 psychological level. 

Ethereum price awaits a cue 

As explained in the January 11 publication, Ethereum price is currently auctioning at the $1,375 hurdle, which has caused two steep corrections in the past and also coincides with another hurdle.

Therefore, a rejection followed by a shift in market structure favoring bears could be the sign investors are looking for to short ETH. However, traders need to be generous with their stop-loss placement as Ethereum price could sweep the current resistance level.

ETH/USD 4-hour chart

The bullish thesis for Ethereum price will kick-start if ETH manages to overcome the $1.375 barrier and produces a higher high. Such a development could see the smart contract token revisit the $1,500 psychological level.

Ripple price shows strength but will it last?

Ripple price shot up on January 10 after days of consolidation. As a result, XRP rallied 5% and is currently tagging the declining trend line connecting the swing highs from November 24. Even if the remittance token manages to overcome this hurdle, it will still need to face the $0.374 resistance level.

So the chances of a further uptrend is unlikely, especially if Bitcoin price takes a U-turn. In such a case, Ripple price could revisit $0.333. 

XRP/USD 4-hour chart

While things are looking up for Ripple price, the overall outlook of the market hinges on Bitcoin’s next move. Therefore, investors need to be careful. A flip of $0.374 hurdle into a support level will invalidate the bearish thesis.