Litecoin at the Crossroads with a Bearish Lean

0
138
Litecoin at the Crossroads with a Bearish Lean

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.

Litecoin 4H Chart 8/26
litecoin 4h chart 8/26

(click to enlarge)

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.

Litecoin 1H Chart 8/26
litecoin 1h chart 8/26

(click to enlarge)

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.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
Previous Post: EUR/JPY and GBP/JPY at the Crossroads

SHARE
Previous articleMalaysian Ringgit’s Volatility Jumps on Growing Tensions in Ukraine
Next articleGold Holding Above Triangle Support; Silver Drifts Lower
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.