Litecoin – Bullish Divergence Suggests Short-term Consolidation

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Litecoin - Bullish Divergence Suggests Short-term Consolidation

Bearish Trend, Bullish Divergence: Litecoin has been bearish since breaking below a support pivot at 6.66 to start the previous week. After consolidating during the second half of the week, price continued to fall over the week and into the Monday 8/18 session, and with strong volume. However as you can see in the 1H chart, litecoin could start consolidating again especially with bullish divergence between price and the RSI reading.

Litecoin 1H Chart 8/19
litecoin 1h chart 8/18

(click to enlarge)

Resistance: If there is indeed a pullback, watch out for resistance when price comes back to the area between the 50-hour and 100-hour simple moving averages, around 4.5. Meanwhile, look for the 1H RSI to stall before pushing above 60. In a bearish market, you can expect sellers when price tests resistance while the RSI tags 60. Above 4.5, the next key resistance should be the 5.00 handle, which was where price consolidated around last week.

The call for a consolidation during the 8/19 session could still be premature, so let’s look at the 15-min chart.

Litecoin 15min chart 8/19
litecoin 15 minute chart 8/18

(click to enlarge)

Bullish Signals Required: In the 15-minute time-frame, price is still bearish as it holds below the 50-period SMA. We need to see price break and then hold above the 50-period SMA, while the 15-min RSI pushes above 60. This would reflect a loss of the bearish trend and momentum in the near-term. Then, we can say that price is in a near-term to short-term consolidation or bullish correction.

Bearish Target: Outside of a near-term consolidation, the short-term and medium-term outlook continues to be bearish towards the 2.21 low on the year. This was a low made form a dramatic spike on July 1st. This created a tail. Sometimes this reflects exhaustion, but in this case, we saw no significant bullish attempt afterwards, so the outlook remained bearish, especially when price broke below the 6.66 support pivot.

Litecoin Daily Chart 8/19
litecoin 8/19 daily chart

(click to enlarge)

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
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