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.
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).
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.
Previous Post by Author: GBP/USD – Stalking a Double Top