LTCUSD price recently broke below a near-term support area, signaling that it is on a downtrend. However price bounced off the lows at 3.100 and is showing signs of a pullback.
Using the Fib tool on the latest swing high and low shows that the 61.8% level lines up with the broken support at 3.350 and also the falling trend line connecting the latest highs of price action on the 1-hour time frame. A large correction could last until this level before LTCUSD makes its way back to the previous lows or lower.
Meanwhile, a shallow correction could reach until the 50% Fib which lines up with the dynamic resistance at the 200 SMA. The 100 SMA lines up with the 38.2% Fib which could hold as a ceiling as well.
Speaking of moving averages, the 100 SMA is safely below the longer-term 200 SMA and is moving farther apart, indicating a buildup in bearish pressure. Stochastic is on the move up so the correction is in play but RSI is already indicating overbought conditions, which means that buyers are already getting tired.
Stronger than expected jobs data from the US triggered a strong downside break for LTCUSD last week but a bounce quickly took place when risk appetite improved. Earlier in the week, rising commodity prices allowed riskier assets such as litecoin to take advantage of dollar weakness.
However, the latest trade balance report from China showed that global economic slowdown fears aren’t completely out of the window yet. The world’s second largest economy showed a much smaller than expected trade surplus, spurred by double digit declines in both exports and imports.
Up ahead, central bank events could spur additional volatility for LTCUSD as these could also impact overall sentiment.