Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH) Outlook: Momentum Fading?

Bitcoin (BTC/USD), Litecoin (LTC/USD), Ethereum (ETH/USD), Technical Analysis – Talking Points

• Cryptocurrencies appear to be showing signs of fading momentum
• Bitcoin idling under all-time highs with SMAs supporting uptrend
• Litecoin, Ethereum consolidating as volatility makes large swings

Bitcoin has been consolidating against the US Dollar just under all-time highs, with other cryptocurrencies such as Litecoin and Ethereum, exhibiting similar trading dynamics. Recent price action shows that upside momentum has been fading. Could a turn lower be in store ahead? Keep in mind that cryptocurrencies can be quite volatile, and investors ought to take this into account in developing their unique trading styles. To find out which style may fit your personality, check out our DNA quiz here.

Bitcoin Technical Outlook

Following brief losses amounting to about 17% in late November, Bitcoin (BTC/USD) has pushed higher and is idling under all-time highs set in 2017 before the cryptocurrency bubble burst. The latter preceded about an 85% drop in Bitcoin before prices bottomed out in late 2018. Recent consolidation occurred as negative RSI divergence unfolded, a sign of fading upside momentum. At times, this can precede a turn lower.

Keep a close eye on the near-term 20-day Simple Moving Average (SMA) which is maintaining the focus to the upside. The next layers of support beyond that is a trendline from October and the medium-term 50-day SMA. Given the volatile nature of Bitcoin and cryptocurrencies in general, prices could bounce off the latter in the event of a turn lower. Otherwise, taking out the 50-day SMA exposes the 12086 – 12486 former resistance zone.

BTC/USD – Daily Chart

Chart Created in TradingView

Litecoin Technical Outlook

When looking at Litecoin, a cryptocurrency that has a much smaller market capitalization compared to Bitcoin, the volatility experienced in late November was more profound. LTC/USD dropped over 30% before bouncing just above the 50-day SMA. Prices seemed to have formed an area of resistance between 94.05 and 89.13 as Litecoin struggled to push above highs from earlier this year.

The turn lower on Friday occurred amid negative RSI divergence as well. Now, prices are hovering above the 20-day SMA which continues to keep the focus to the upside. Otherwise, a drop from here exposes the 50-day SMA which is now above the November 26th low. In the event of a profound shift lower, ‘potential support’ on the daily chart below could tame losses.