After a little over a week of consolidation, litecoin finished this past weekend with a relatively sharp bearish breakout. Let’s assess this breakout and the overall technical condition.
The 1H chart shows the consolidation roughly between 1.75 and 1.90 in the past week. After a failed attempt to break above 1.90, price drifted back to towards the range support and plunged below it during the 5/31 session.
As we begin the week, price has almost returned to the 1.60 handle. The breakout is sharp and if price can hold under 1.80, there would still be bearish pressure in the near to short-term (next week or 2).
In the 4H chart, we can see that before the consolidation between 1.75 and 1.90, there was a sharp rally that broke above a month-long consolidation between 1.30-1.50. This range can be considered a price bottom and is still intact. Therefore, the bearish outlook from today’s bearish breakout should be limited to the short-term.
There is still some room to fall, but price should hold above 1.50 in the bullish scenario. A break below 1.45 however should reflect a market that has failed to establish a price bottom, and thus introduce the bearish outlook with 1.30 under pressure again.
The daily chart shows that litecoin has been essentially trading sideways in 2015 despite a downward spike to 1.00 in April. Now, if the short-term bearish price action does hold above 1.50, the pressure would return towards the 1.90 resistance. Then above 1.90, pressure would be towards the 2.44 resistance. A break above 2.45 would complete another price bottom in the daily chart, which would be much more significant than the 1.30-1.50 price bottom we saw in the 4H chart. A break above 2.45 would open up a bullish outlook for the second half of the year, with a short-term outlook towards the 2.76 high on the year up to 3.00, and a medium-term bullish outlook towards a resistance pivot in Oct-Nov 2014, around 4.40.
Previous Post by Author: Key Fundamental Factors this Week (6/1 – 6/5)