Litecoin (LTC) Technical Analysis: $40 In Sight, Trying to Break Through 1D Resisting Kumo Cloud
Litecoin has had a promising start to 2019. It’s, up over 25% already from its end-of-year close and is currently breaking bullish from an inverse head and shoulders pattern towards the psychological $40 mark. The recent launch of OkEx’s new LTC perpetual swaps product - a new type of futures contract with no expiry date - along with the Litecoin Foundation’s latest sponsorship deal with the UFC and the Litecoin Lightning Network surpassing over 100 active nodes appear to be the main drivers for the sudden change in sentiment.
With Litecoin is now only $230 million away from stepping over Stellar and EOS to reclaim its place among the top 5 cryptos, will bulls be able to keep up their current pressure and extend the rally? Let’s find out.
On the 1D LTC/USD chart, we can see that LTC recently completed a bullish inverse head and shoulders pattern (H&S) on January 5th, after the asset retraced back to the neckline along the $35 level. This is a very positive sign, as this particular trend reversal pattern usually implies that a strong bull run is likely which could help to attract new investors towards the project.
We can also see that LTC has been tracking well to Fibonacci retracement levels from the swing high at $57 to the swing low at $22.74.
-The 0.236 fib level at the $30 mark was a key support for bullish traders on New Year’s Eve, and allowed buyers to springboard up to the neckline to complete the right shoulder of the H&S pattern.
-The 0.382 fib level at $35 was a particularly strong resistance for Litecoin during the last week of November and helped to create the left shoulder of the pattern.
-The 0.5 fib level at $39 right now is currently proving to be a difficult resistance for intraday buyers to overcome, particularly as it is coupled with the top of the 1D resisting kumo cloud.
A breakout above the 1D resisting kumo cloud will be another very strong bullish reversal trend signal to help catapult LTC off its bottom, but if the price action doesn’t break through this critical level soon, then it will be likely that bears will take back control of the asset.
This will undoubtedly be placing a lot of pressure on bullish traders, and is made worse by the fact that there doesn’t seem to be a clear interim support for them to rest along in between the 0.5 and 0.382 fib levels, if this current test fails.
Looking at a number of indicators, however, it seems that bullish momentum is simply entering into a brief correction phase and doesn’t appear to be reversing bearish.
-The Aroon Up line has bullishly converged above the Aroon Down line.
-Indicator dots on the Parabolic SAR are still beneath the price action.
-The 12MA is still high above the 26MA, and both lines are above the signal line on the MACD indicator.
-On the 4H chart, we have a golden crossover between the 50 and 200 EMA lines.
From this, we should expect bulls to collect around the $38 mark and recover from today’s selling pressure before attempting another run potentially tomorrow.
Litecoin (LTC) Price Targets
All ROIs are calculated from the asset’s current value at $38.95.
PT1: $40 Psychological level. (2.70% ROI)
PT2: 0.618 Fib level/ $43. (10.40% ROI)
If LTC can surpass this level, then it will be the first time LTC has broken above the 100 moving average since May 2018. This will be another strong buying signal to traders that Litecoin is entering into a new bullish phase.
PT3: $48 (23.23% ROI)