Litecoin – Consolidation after a Bullish Surge

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Litecoin - Consolidation after a Bullish Surge

Last week, litecoin broke above an ascending triangle resistance at 1.50 and surged to almost 1.94 before stalling.  Over the weekend ltcusd started to form a slightly bearish channel as we can see in the 1H chart.

Litecoin (LTCUSD) 1H Chart 5/25
litecoin 1h chart 5/25
(click to enlarge)

As we begin this week, ltcusd found resistance at 1.85. If litecoin is going to consolidate further it is likely going to fall towards 1.70 and the 1H RSI will likely fall below 40. If price holds above 1.80 and the RSI above 40 for the most part during the 5/25 session, then we might not even have further consolidation. In this scenario, the pressure would be back towards the 1.94 high up to the 2.00 psychological level.

A break back below 1.60 might put the bullish outlook on hold. In this scenario, we are likely in a larger and longer consolidation then the channel consolidation we are seeing now.

The thing is, it will likely take more than a break below 1.60 to open up the bearish outlook. Since breaking above triangle which had a range between 1.30-1.50, it will probably take a break below 1.45 to revive the bearish outlook. In the 4H chart, look for the RSI to hold above 40 in t bullish-neutral mode .

Litecoin (LTCUSD) 4h Chart 5/25
litecoin 4h chart 5/25
(click to enlarge)

Let’s take a look at the bigger picture.

Litecoin (LTCUSD) daily chart 5/25
litecoin 4h chart 5/25
(click to enlarge)

In the daily chart we can see that price action has been sideways so far in 2015, even though ltcusd did manage to drift lower in April to the 0.98-1.00 area. We can say the market is neutral-bearish in the medium-term, but turning bullish in the short-term.

In this mode, there is upside risk towards the 2.44 resistance pivot in January, as well as the 2.76 high on the year. There might even  be a clear-out towards 3.00 before the market finds resistance and starts a significant downswing.

Again, if price falls below 1.60, we should keep this bullish outlook on hold. If price falls below 1.50, we should really consider looking back towards the 0.98-1.00 area.

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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.