Litecoin price action is at the crossroads. Let’s start with the overall picture, which has been bearish. There was a downward spike on July 1st that made a low on the year at 2.21, but closed back around 7.83 during the same session. Price has seen been drifting back down, “chewing” down the tail, and thus there is a bearish outlook toward 2.21.
When we look at the 4H chart, we can see that this bearish trend has stalled at 3.33, after which price rallied to 6.19. Now, this rally had some volume, and brought the 4H RSI above 70, which signals bullish momentum. The RSI reading is still above 40, which suggests this short-term bullish momentum is still in play.
However, when price retreated from 6.19 it respected a falling trendline, keeping the medium-term bearish outlook intact. It looks like price will need to clear below the 4.66 pivot and pull the 4H RSI below 40 before reviving the bearish outlook. Before that, price is still trading between the 100- and 50-period SMAs, which describes a market at the crossroads.
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If price does break below 4.66, the 3.33 level is exposed. Also, if price then pulls up ut respects the 5.00-5.50 area as resistance, the bearish outlook should be developing. A break below 3.33 can open up the bearish outlook toward the 2.21 low on the year.
Now, an early signal can be anticipated in the 1H chart. You can see price consolidating, as the 200-, 100-, and 50-hour SMAs are clustered together. The 1H RSI is holding above 40, and shows near-term bullish momentum being maintained. A break below 4.90 would clear below the SMAs and likely drag the 1H RSI below 40, which could be an early sign of bearish continuation. Again, the bearish outlook can gain traction if we see price stay south of 5.00-5.50 after a pullback.
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At this point, a break back above 6.00 can put the bearish outlook in trouble. But a break above 7.00 might be needed to liberate litecoin from its current bearish outlook toward 2.21.
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