A closely followed crypto strategist is issuing a warning to investors saying that a handful of altcoins look set for a corrective move after rallying over the past two weeks.
Pseudonymous analyst Cheds tells his 275,200 Twitter followers that he is keeping tabs on the Shiba Inu memecoin (SHIB), Litecoin peer-to-peer payment protocol (SLD), blockchain-based gaming ecosystem The Sandbox (THE SAND), Uniswap decentralized exchange (United) and blockchain scaling solution Polygon (MATIC).
According to Cheds, crypto bears should keep a close eye on these five altcoins for potential retracements.
A Few Altcoins to Watch for a Short Setup$SAND$SLD$SHIB$MATICUNI$ https://t.co/SHmhKu9FUc
—Cheds (@BigCheds) July 20, 2022
Cheds also points out that the market structure of many altcoins resembles the current price action of Litecoin, which it says is showing signs of bullish exhaustion after rallying more than 20% since July 13.
“LTC four hours [chart] Head and shoulders forming the top. Much of the market has this kind of look with variations, three to four flares with different peaks.
Traders see the head and shoulders top as a sign that a market reversal could be on the horizon.
As for bitcoin (BTC), Cheds warned its supporters last week that the leading crypto asset was starting to show signs of weakness after a metric showed bearish divergence.
“BTC and ETH with Outstanding Volume (OBV) Carry Divergence on the Daily Chart.”
The OBV is a technical indicator that measures buying and selling volume while a bearish divergence suggests that a trend reversal may be in sight. According to Cheds, a Bitcoin correction back to $20,600 solve the bearish divergence OBV.
The crypto analyst also notes that the 200 moving average on the four-hour chart is hovering around $20,000.
“The BTC 200 four-hour moving average is around $20,900.”
At the time of writing, Bitcoin is trading hands for $22,556, down less than 1% on the day.
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