Litecoin was in a consolidation and bullish correction mode last week, rallying from a low of 3.33 to 6.19. There was resistance around the 6.0 handle, and price retreated since than. During the 8/23 Saturday session, price continues to slide, and has cleared the 5.0 level and the 50-period SMA in the 4H chart, bringing back the bearish outlook. The next phase in the 4H chart would for the RSI reading to drop below 40, which shows loss of bullish momentum from last week, and thus reduces the prospect of a bullish market.
(click to enlarge)
The volume is not strong with this decline, so let’s not get ahead of ourselves yet. It is true we should maintain a bearish outlook be cause the prevailing trend is bearish, especially a break below a support pivot at 6.66. The bearish outlook exposes the 2014-low at 2.21. While this is still the outlook for the medium-term, we did see short-term neutralized if not turned bullish. So, let’s first limit our bearish outlook to the 3.33-3.40 lows from last week. We have to juggle this conservative outlook with the very bearish outlook seen in the daily chart.
As you can see on the daily chart, there was a spike down to 2.21 on July 1st, and price has since been cheweing down this “tail”. The market looks poised to do so, and threaten to push even lower back to the common price in the 1.50-2.0 area througout 2013 before the November to December surge.
Litecoin Daily Chart 8/23
After looking at the 4H and Daily chart, we can be neutral, bearish, or neutral-bearish, but there should not be any consideration of a bullish market yet, at least until price gest to 2.21, and the daily RSI back below 30.
Also, if the 4H RSI fails to break below 40 and comes back up while price stays north of 4.0 and climbs above 5.0, we should expect further consolidation, bullish correction in the upcoming week.
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