Litecoin Pauses Chewing its July Tail

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Litecoin Pauses Chewing its July Tail

Litecoin has been bearish throughout the year, essentially walking back a monster rally in 2013 from below 2.00 to 48.00. In July litecoin dipped to 2.21 and immediately jumped back up. A tail like this can signal exhaustion. But if price does not reverse, as is the case here, then we can expect litecoin to try and chew down the tail.

Litecoin daily chart 8/12
LTCUSD 8/12 Daily Chart

(click to enlarge)

Since the spike down in July, price found a support pivot at 6.66. We have seen LTCUSD drift toward this support since July, and then suddenly this week, we saw a strong breakdown and the start of tail-chewing. This dip is accompanied by a strong increase in volume, adding weight to the bearish outlook.

In the short-term, litecoin looks oversold as the RSI readings in both the daily and 4h charts are below 30.

Litecoin 4H chart 8/12
litecoin 4h chart 8/12

(click to enlarge)

If price starts to consolidate we should start looking at the 6.66 former support area as a possible resistance. Also, we should anticipate sellers if the 4H RSI approaches 60 while price pulls back to the 6.66 level.

At this point a rally above 7.00 could spell trouble for the bearish outlook. There is a falling trendline coming down from mid-July’s high at 9.14.  A break above 7.0, a break above the trendline, and a push of the RSI back above 70 would be signs that a bullish market is developing in the 4H chart. For now, the market is bearish, and has downside risk toward the 2.21 low on the year.

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