Break from Volatility Squeeze and Consolidation Range
After almost a month of consolidating between 1.30 and 1.50, litecoin is finally breaking out of the lull in volatility pushing above 1.50. Within range, we have seen lows rising but resistance holding steadfast at 1.50, forming somewhat of an ascending triangle.
We noted in the previous update on litecoin that after finding resistance at 1.50 so many times, a breakout would likely be sharp. This is exactly what happened as litecoin shot up to 1.95 before stalling. And this rally might not be over.
Initiating a Bullish Outlook:
We did discuss monitoring the 1.60-1.62 level as well as the 1.70 level as a breakout target based on the width of the consolidation range. The rally wiped out these levels easily during the 5/22 session, suggesting that litecoin could be starting a bullish trend.
If there is a pullback, we should see price hold above 1.50 and the 4H RSI hold above 40. If not the bullish outlook will be neutralized. A break below 1.45 might even return the cryptocurrency back to a bearish mode.
Litecoin (LTCUSD) Daily Chat 5/22
(click to enlarge)
Next Key Resistance:
While the 4H chart shows a bullish breakout that signals an uptrend in the short-term, we have to remember that litecoin has been bearish throughout 2014 and even though it slowed down at the beginning of 2015, price did fall further to 1.00 in April. We do see strong bullish momentum as the daily RSI pushes above 80, but we still should look out for resistance first at 2.20, where the 200-day SMA resides, then the 2.42 resistance pivot from January.
The 2.00 Anchor:
From a market psychological perspective, if price can start holding above 2.00, there would be a strong likelihood that ltcusd will break above 2.42 and begin a medium-term uptrend back to price levels not seen since 2014. However, if we price failing to clear 2.00, we should remain bearish to neutral for the medium-term.
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