Litecoin (LTC) Technical Analysis: Leads Market Recovery But Unlikely to Stay Above $100 For Long

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Litecoin price is standing out as the best performing cryptocurrency among the top 10 today, with an 8.55% gain against the US dollar and a 6.38% lead ahead of Bitcoin.Trading volume has also seen a notable increase of $1.3 Billion in the last 24 hours, according to CMC data, but a rising wedge pattern on the daily chart foreshadows a steep correction soon.

In the news recently, Litecoin’s hash rate reportedly hit a new all-time high following rumours that Bitmain’s next generation L5 miner has started operating on the network. A rising hashrate is regarded as a positive sign for the network, as it increases overall security and further safeguards against 51% attacks.

Other fundamental catalysts which are likely to be driving new bullish support towards the project is the LTC halving event, which is scheduled to take place in less than 60 days. This will see LTC block rewards reduce from 25 to 12.5, and means that less Litecoins will be entering the market from August 6 onward. This increase in scarcity is likely to have a significant impact on LTC’s price ahead of the event and should draw in more investors as the date approaches.

Litecoin Price Analysis

On the daily LTC/USD chart we can see how the price action has been consolidating inside a bearish rising wedge pattern, between two uptrending trend lines which pinch together. When this happens, it is usually a sign that bullish traders are tiring and the uptrend is weakening. The price continues to make higher highs and lows until it reaches maximum consolidation between the two levels, and then eventually breaks bearish. The breakouts from these patterns are usually quite strong, and a recent example of this can be seen on Bitcoin’s 1D chart (see below).

We can also see that Litecoin’s price has consistently found strong support at key fibonacci levels during the last month - particularly the 0.5, 0.382 and 0.236 levels ($72, $84 and $98 respectively). Now however, there are no more fibonacci supports left between its current price and the YTD-high at $122, which means that if the asset does start to correct, it’s unlikely to find strong support above $100.

Looking at the RSI and MACD indicators we can see a number of bearish signals that suggest the asset is likely to complete the rising wedge pattern. Over the last few days, the RSI indicator line has broken through the uptrending support level which it had been tracking along since April 29. The MACD is also showing a bearish divergence between the 12 and 26 moving averages.

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