Litecoin Technical Analysis: (LTC/BTC) Waging War. Traders Battle It Out Ahead Of LTC Breakout
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The long battle that has been waging between Litecoin bears and bulls over the course of this year, could be about to end.
After tumbling from it’s all-time high achieved back in mid December, LTC has been at the mercy of strong bearish opposition throughout 2018; with each bullish run falling back to the base support after failing to break through the seller’s ranks. In the chart below we will see how the exhausted bulls have been forced further and further down over the course of their 5 month long assault, but nevertheless they come back each time.
Today on the brow of the hill, Litecoin bannermen are amassing again in preparation for a final attack. Will this 3rd rally of spirited support be enough to wear down the bears defenses and take the higher ground? Or will the battle-hardened bears fend off this new advance and cast Litecoin down deeper into the mud? Let’s soldier on!
In the 1D LTC/USD chart above we can see both bullish and bearish foreshadowings for Litecoin going into the last month of Q2. The short-term future of LTC’s price action pivots almost entirely on the outcome of this battle over the next few weeks.
Bearish Victory & Price Targets
On one hand we see that the candles have fallen into a bearish descending wedge pattern, characterised by the strong support line at $110 and ever-decreasing lows; as a lack of demand and selling pressure progressively diminishes each bullish uptrend. These patterns usually force bullish traders into submission inside the consolidating trend lines until the base support falls through. Once the support has been compromised, panic selling usually follows and exacerbates the downtrending price action.
We can also see that the exponential moving averages (EMAs) are favouring the bears over the current candle activity, with the faster 22 (yellow) and 50 (blue) EMAs trifurcating below the 200 (red) EMA, as momentum swings against the buyers. On the basis of these two strong signals alone, it’s very likely that we could see LTC breakout bearish below the base support as the pattern plays out over the next 4 weeks.
A strong selling point will be apparent once candles start to hold consistently below the base support. It’s likely that big red candles will tank the price as stop-losses and auto-trades are triggered on the exchanges. This decline will likely drop LTC way down beyond the $100 mark, and find support somewhere along the $73 area (-49.66% loss from projected breakout area at $145 level). There’s a softer support above at $85 which may provide a rebounding platform for Litecoin if it is able to pull back an early recovery.
While the bears have successfully held down LTC’s price over the last 2 uptrends, we can now see a bullish triple bottom emerge as support rallies again off the base support for another movement. Bullish breakouts from triple bottoms are usually supported by thinning volumes, shown in the chart above (white dashed line), as resisting trades dwindle in numbers. Triple bottoms highlight bullish tenacity and sentiment for the asset, while also weakening bearish confidence.
RSI over 2hr candles is also showing a dramatic increase in buying momentum from an oversold moment, despite a fairly flat price action over the past few days; hinting that bullish support is growing.
We would like further confirmation of increasing money flow on the CMF indicator, which is currently still beneath the zero line. A convergence above this line would supplement this bullish foreshadowing.
We would like to see LTC continue to uptrend now towards the downtrending resistance line, somewhere near $145 which is our predicted breakout zone.
All traders should wait until candles hold consistently above the resisting line to confirm a breakout. From there we could expect to see explosive trading from dormant LTC investors who have been waiting patiently for this long drawn out pattern to finally complete.
An early price target for this surge will be a retracement back to $180 (24.14% ROI) where LTC previously hit during the second peak of failed bullish runs in the descending triangle pattern.
From there we would expect investor confidence to grow as LTC looms close towards $200. The second price target therefore will be at $195 (34.58% ROI) as the bulls run into selling pressure from investors taking profit, in anticipation of a sell-off before reaching $200.
Depending on market sentiment at this stage, we could see LTC ‘overbuy’ above the $200 mark before correcting, at around $210 to deliver an overall ROI of 44.83% from the breakout point.