Litecoin Pares Losses, 200-Hour SMA Tested

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Litecoin Pares Losses, 200-Hour SMA Tested

Litecoin is trying to start a bullish correction. It has been bearish since falling below 6.66. It was already drifting down before that, but after the breakout, the decline accelerated. This week price fell to 3.33 before finding support. Then during the 8/19 session, price rallied back to about 4.90 before finding resistance. The 200-hour SMA resides at 4.90 so the rally was challenged by a key intra-session resistance factor, and has so far stalled.

Litecoin 1H Chart 8/19
litecoin 1h chart 8/19

(click to enlarge)

The 1H RSI was also above 70, which reflects overbought condition. Also note that a previous consolidation area, from last Thursday throughout the weekend, litecoin was consolidating around the 4.90 handle. Therefore, this is a level to watch out for resistance especially with the 1H RSI in the overbought territory.

The 4H chart shows that this is the strongest bullish correction since the bearish market below 6.66. However, the RSI is still below 60 in the 4H chart, so the momentum is still maintained. We should see resistance in the 4.90 area, and if not, we should see the 5.37 pivot provide resistance as well.

Litecoin 4H Chart 8/19
litecoin 4h chart 8/19

(click to enlarge)

There is still downside risk toward the 2.21 low on the year, which was made in July on a dramatic spike down.

It should be noted that the current rally has relatively high volume, so a consolidation period might last more than just one session. A bearish attempt from 4.90 might not be the bearish continuation swing towards 2.21.I would expect some sideways, choppy, non-directional action this week before we can see if litecoin is setting up for bullish correction, or a bearish continuation toward 2.21.

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