Litecoin Developing Some Bullish Bias

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Litecoin Developing Some Bullish Bias

The mode for litecoin in 2014 has been bearish. But in the short-term, it has been developing some bullish bias since last week, from a low of 3.33. We saw price stall at 6.19, but we are also seeing a failure to continue the prevailing downtrend. Instead, price is now holding above the 100-, and 50-period simple moving averages in the 4H chart. Price also cracked a near-term falling trendline from last week. The 4H RSI has tagged 70 and has been staying above 40, showing maintenance of the bullish momentum in the short-term. There is a good chance litecoin will retest the 6.19 resistance.

Litecoin 4H chart 8/27
litecoin 4h chart 8/27

(click to enlarge)

At this point a break below 5.00 would clear below the moving averages in the 4H chart, which would be a first sign of bearish continuation. If the 4H RSI falls below 40, it would be the second sign. If the prevailing trend is preserved, there is still downside not only to the 3.33 low on the month, but also toward the 2.21 low on the year.

However, if price breaks above 6.20, then above the 200-period SMA in the 4H chart, the bearish outlook might be in trouble. A beak above 7.00 might be needed to introduce a bullish outlook.

Litecoin 1H Chart 8/27
litecoin 1h chart 8/27

(click to enlarge)

When you look at the 1H chart, you can see that price is consolidating in the intra-session, between 5.40 and roughly 5.65. A break below 5.40 could be an early sign of bearish continuation, but we should also check the 1H RSI to make sure it breaks below 40 before considering the bearish continuation scenario. You can see that a break below 5.0 would definitely clear the 200-, 100- and 50-hour SMAs, and most likely will pull the 1H RSI below 40.

If price breaks above 5.65 instead, look for the near-term bullish outlook to test the 6.19 resistance.

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