A popular crypto strategist is warning investors of a potential corrective by some altcoins which have been rallying over the last two weeks.
Cheds, a pseudonymous analyst on Twitter has been keeping an eye on some coins. He tells his 275,000 Twitter followers that he's monitoring memecoin Shiba Inu (SHIB), peer-to-peer payments protocol Litecoin (LTC), blockchain-based gaming ecosystem The Sandbox (SAND), decentralized exchange Uniswap (UNI), and blockchain scaling solution Polygon (MATIC).
Cheds says that crypto bears should closely watch these five altcoins for potential retracements.
Some altcoins worth watching for a short setup$SAND$LTC$SHIB$MATIC$UNI https://t.co/SHmhKu9FUc
— Cheds (@BigCheds) July 20, 2022
Cheds notes that the market structure of many altcoins looks similar to Litecoin, which is flashing signs of bullish exhaustion after rallying over 20% since July 13th.
"LTC four-hour [chart] head and shoulders top forming. Much of the market has this kind of look with variations, three to four thrusts with different peaks."
The head and shoulders top is often seen as a sign that the market's direction may be about to change.
Cheds warned his followers last week that the leading crypto asset, Bitcoin (BTC), was starting to show signs of weakness after one metric flashed a bearish divergence.
"BTC and ETH both with on-balance volume (OBV) bear divergence on daily chart."
The OBV has been a popular technical indicator for years. It measures buying and selling volume, which tells us about the market's sentiment at any given time – namely, whether it may be turning or not turned away from its current trend direction by an impending selloff. Cheds says that a Bitcoin correction back to $20,600 will resolve the OBV bearish divergence.
The crypto analyst also notes that the 200 moving average on the four-hour chart is hovering around $20,000.
"BTC four-hour moving average 200 is right around $20,900."
Bitcoin is currently trading at $22,555, representing a decrease of less than 1% over the past day.