Litecoin Remains at the Chop Shop

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Litecoin Remains at the Chop Shop

Triangle within a Range: Litecoin has gotten into a trading range between 1.30 and 1.50. Within this range, it has developed an ascending triangle with multiple failures to break above 1.50, along with subsequently higher lows.

Litecoin (LTCUSD) 4H Chart 5/18
litecoin 4h chart 5/18
(click to enlarge)

Slight Bullish Bias: The 4H chart shows a very choppy and messy market but we can assess a bullish bias from it. First of all, the ascending triangle itself is a sign of a slight bullish bias because it shows bears giving up earlier and earlier. It also makes a break above the 1.50 significant because we can assume that every time traders sold litecoin for 1.50, they are putting in stops just above. When these stops are triggered, we are likely going to see a sharp break to the upside. Furthermore, price is holding above the cluster of 200-, 100-, and 50-period simple moving averages (SMAs). The RSI almost tagged 70 and has held above 40. Basically, we do have a vulnerable bullish bias and momentum.

Central Pivot: This bullish bias can easily be lost if price falls below the central pivot of 1.40 especially if the RSI also falls below 40. Before we examine that scenario, let’s discuss the bullish breakout scenario. A break above 1.50 opens up a previous resistance around 1.60-1.62. Also, because the range between 1.50 and 1.30 is 0.20, the breakout target is 1.70 (1.50+0.20).

Litecoin (LTCUSD) Daily Chart 5/18
litecoin daily chart 5/18
(click to enlarge)

Bearish Trend: Now, going back to the scenario where price breaks below 1.40. That would put pressure on the 1.30 range low. When we look at the daily chart, we can see a prevailing bearish trend that has tagged 1.00 as the low on the year.

Therefore, the bearish pressure would be in-line with the prevailing trend and we should be careful looking for support at the 1.30 pivot.

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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.