Since a surge to 1.94 last week, litecoin as settled into a descending triangle seen in the 1H chart.
Note that price has broken above this descending triangle, returning above the 100-, and 5-hour simple moving averages. The RSI has shown a loss of the prevailing bullish momentum when it fell below 40 during the consolidation. Now, it has pushed above 70, which signals revival of the bullish momentum.
During the 5/27 session, we are seeing a retreat from 1.90. But as long as price trades above 1.80 and the RSI holds above 40, the bullish scenario would be in good shape. Otherwise litecoin would remain in consolidation mode.
Note that a bounce off the 1.82-1.83 level would show respect of the 100-, and 50-hour SMAs as support, IT would also show respect to the middle of the 1.75-1.96 range, which would suggest that the cryptocurrency has anchored into a bull’s market at least in the short-term.
The bullish scenario in the 1H chart reflects short-term upside risk towards the medium-term consolidation resistance around 2.45. A break above this level would complete the formation of a price bottom formed in the first 5-months of the year. This would first open up the 2.73 high on the year, with risk of pushing to the 3.00 psychological handle. We should note that the RSI already shows a market that has initiated bullish momentum, so we already have some early bullish signals and can start expecting a bullish outlook despite the downtrend in 2014.
The bullish outlook would hold more water if a subsequent pullback holds above 2.00, which would reflect respect of the multi-month price bottom. This would continue the upside risk towards a support/resistance pivot area between 4.35 and 4.60.
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