Litecoin Testing a Near-term Trendline Support

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Litecoin Testing a Near-term Trendline Support

This week, litecoin found support at 3.33, and has rallied to 6.18 by the 8/21 session. As we get started with the 8/22 global session, price has retreated from 6.18. However, the 1H chart still shows a bullish market in the near-term.
1) The rising trendline from 8/19 is still holding as support.
2) Price is still above the 200-, 100-, and 50-hour Simple Moving Averages (SMAs).
3) The 1H RSI is still above 40 after tagging above 70 – bullish momentum is maintained.

Litecoin 1H Chart
litecoin 1h chart 8/21

(click to enlarge)

It will probably take at least a break below 5.35, and the 1H RSI to be below 40 before we should look back to the bearish outlook. For now, the near-term outlook is bullish, and the short-term mode has shifted from bearish to neutral.

The bullish outlook should be limited because the prevailing trend has been bearish, especially after a break below 6.66, which opened up the 2.21 low on the year. The 4H chart shows that price is consolidating around 6.0, and the 100-period SMA. The RSI has tagged 70, and there is a slight bearish divergence. Litecoin looks ready to dip. Again, a break below 5.35 should open up the bearish outlook in the short-term. However, since we lost the bearish momentum – RSI popped up above 60 and tagged 70 – we should be conservative on the bearish outlook fro now, and limit to to the 3.33 low. the mode should be seen as neutral-bearish.

Liltecoin 4H Chart
litecoin 8/21 4h chart

(click to enlarge)

Now, if price does come down, but fails to clear below 5.0, and the 4H RSI holds above 40, then we should start thinking about the bullish outlook in the short-term. First the bullish outlook would be the 6.66 resistance pivot to the 7.00 psychological handle. A break above 7.0 will be needed to introduce a bullish outlook in the medium-term.

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.