Bitcoin and Litecoin – Double Bottoms vs. Bearish Outlooks

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Bitcoin and Litecoin - Double Bottoms vs. Bearish Outlooks

Bitcoin and Litecoin have been bearish in 2014, but has been choppy and more or less trading sideways since October. Both virtual currencies then started to look bearish again around late November. Let’s take a look at the charts to assess their technical conditions.

Bitcoin (BTCUSD) 1H Chart 12/28
bitcoin 1h chart 12/28
(click to enlarge)

Bitcoin continues to be bearish in December making new lows on the month over the weekend, just above 307. The 1H chart shows the market rebounding from around 307 to about 317. This rally put price at the 50-hour and 100-hour SMAs, which are so far acting like resistance.

316-317 is also a support/resistance pivot area, and if bitcoin is bearish, price should start falling. Now, some chartists might see a double bottom forming, or even completed. This is technically true, but if price falls back below 312, it is likely a false double bottom, an simply a near-term flat consolidation. The market is therefore still bearish, with 307 and the 285 low on the year in sight.

Only a hold above 312 and a rally above 318 should suggest bullish correction. The bullish outlook should be limited to around 325 at the moment, where there could be resistance due to a falling speedline.

Litecoin (LTCUSD) 1H Chart 12/28
litecoin 1h chart 12/28
(click to enlarge)

Litecoin has also been bearish in December, but has flattened out while bitcoin continued lower. Since Christmas, litecoin has be trading above 2.63, but found resistance at 2.80. As we get ready for another week, it has respected the Christmas-support again.

This initial rebound on Sunday could be an early sign that a double bottom might form. However, as long as price is under 2.75, the market should remain bearish. In fact if the market is indeed still bearish, we should see resistance around the 2.70-2.72 support/resistance pivot area, which is also where the 100-, and 50-hour SMAs reside.

With the bearish outlook still dominant, price remains pressured toward 2.63, then the 2.21 low on the year. A break above 2.80 however could signal a short to medium-term consolidation/ bullish correction.

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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.