Bitcoin and Litecoin Awaiting Consolidation Breakouts

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Bitcoin and Litecoin Awaiting Consolidation Breakouts

Cryptocurrencies, or virtual currencies bitcoin (BTCUSD), and litecoin (LTCUSD) have been consolidating in the past couple of days. Let’s take a look at their charts and prepare for the pending breakouts.

Bitcoin (BTCUSD) 1H Chart 10/12
bitcoin 1h chart 10/12

(click to enlarge)

Bullish Week:
The 1H chart shows that price was bullish last week, rising from about 275 up to about 395 before consolidating. The 1H RSI shows bullish momentum as it pushed above 70. Amid the current consolidation, the 1H RSI has held above 40, which shows maintenance of the bullish momentum. Price is in the middle of the 200-, 100-, and 50-hour simple moving averages (SMAs), and if it can hold above the SMAs, there will be more bullish outlook.

Consolidation; breakout scenarios:
There is a narrow consolidation between 349 and 368. If price breaks above 370, bitcoin will signal bullish continuation to test that 400-405 resistance area in the near-term.  A break above that opens up another resistance area around 430.

IF price falls below 340, and the 1H RSI falls below 40, we are likely in a bearish continuation of a higher time-frame, with the downside risk at least toward 275 in the short-term.

Litecoin (LTCUSD) 1H Chart 10/12
litecoin 1h chart 10/12

(click to enlarge)

Litecoin’s Not-so-Bullish Week:
Litecoin’s rally last week did not have as much momentum as bitcoin’s. The RSI was unable to push above 70 and has fallen below 40. Price has fallen below the cluster of SMAs. Litecoin’s price action has a bearish lean in the near-term, and bitcoin’s lean is slightly bullish in the near-term, though both has short to medium-term bearish bias outside of last week’s price action.

Bearish Continuation:
If litecoin holds below 3.80, the bearish outlook is still in play with downside first toward the 3.30-3.40 August and October lows. Below this area, the 2.21 low on the year comes into play.

Bullish Outlook should be Limited:
A break above 3.80 will be needed to shift the near-term mode back to a bullish one. The upside risk should probably be limited to the 4.40 area, but there will be resistance factors starting at 4.00-4.10.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.