ForexMinute.com — While Litecoin remains to be as choppier as it has been for a last few days, it is surely offering a plentiful of intraday trading opportunities for day traders like us. Yesterday, the price continued to move between the range we had suggested in our previous analysis. It retested the support line on an uptrend and cancelled the rally right ahead, only to form a corrective wave towards south.
But in last few hours, Litecoin is trending back towards upside levels, this time due to a sudden rally noticed in the Bitcoin market. The good-mood price action is rumored to have influenced by the announcement of the final auction of Silk Road Bitcoins. The historical data illustrates clearly how Bitcoin reacts positively to auction events. It might be the reason of such an optimistic ripple effect.
Coming back to our intraday breakout analysis, we mean to prepare our trades for every unannounced action, and has therefore setup a few risk levels as a part of entry/exit strategy. What are these levels? Let’s find out:
Litecoin 4H Chart
The 4H BTC-e chart above displays Litecoin in a near-term bullish bias, for the price is just now a slightly above its 50-H SMA and the 4H RSI too surged to near 59 — indicating a favorable buying scenario. The MACD indicator, on the other hand, is maintaining its positive bias.
While the bias looks promising, there is also a huge possibility of price taking a dip after establishing an intraday peak within the prevailing range (2.920 fiat as support, 3.031 fiat as resistance). The RSI mark shows how price has lately reversed without touch the 60-mark. It could happen once again.
With this said, we have our bets on both ends. At first, we are expecting price to extend its rally towards in-term resistance thanks to supporting fundamentals. While it comes as a naturally profitable long trade, an extended position towards 3.046 fiat as the medium-term upside target also holds promises for an attractive reward profile. With this being the case, a stop loss near 3.017 fiat ensures a timely exit should the price changes directions.
Looking the other way, a reverse action could result in Litecoin retesting its temporary support line near 2.957 fiat, while sighting 2.932 fiat as its immediate downside target. On this trade, a stop loss near 2.965 fiat will ensure a timely exit in case the market turns to bulls.
If the support line is broken, traders are recommended to stay out of the market.