Litecoin – Support at 4.66, Resistance at 5.35

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Litecoin - Support at 4.66, Resistance at 5.35

Litecoin was bearish this week, falling from just below 7 to start the week to 4.66 before consolidating. A resistance was established at the 5.35 level during the 8/14 session. However the trend and momentum in the 1H chart is still very bearish.

1) The RSI reading has held below 60 after the tagging below 30, even 20. This shows maintenance of bearish momentum in this time-frame.
2) Also, the 200-, 100-, and 50-hour are in bearish alignment, and price has been staying below all of them this past week.

Litecoin 1H chart
litecoin 1h chart 8/16

(click to enlarge)

If price comes back above 5.35, we can expect a bullish correction, but within the context of a bearish outlook in the medium-term. Since a break below 6.66, litecoin has exposed the 2014-low at 2.21, established by a sharp spike down on July 1st. In the bullish correction scenario, the first resistance wil lbe around 5.85, the 8/12 high. We should also expect sellers around 6.00-6.05 around the 200-hour SMA, especially if the 1 hour RSI is above 70. We should limit the most bullish outlook to 6.66 for now.

The 4H chart also has a very bearish look. The moving averages slope downwards, are in bearish alignment, and spreading apart, while price is trading below them. In fact price has been below the 200-period SMA in the 4H chart since June.

Litecoin 4H chart
litecoin 4h chart 8/16

(click to enlarge)

Also note the July 1st spike down. This was not an exhaustion spike and therefore, the outlook is that litecoin will eventually “chew” down the tail down to the low of 2.21. The break below 6.66 affirms that. A pullback that fails to break above 6.66 would continue to signal this bearish scenario.

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