LTCUSD has been climbing in the past few days but a reversal may be in order as a double top can be seen on the 1-hour chart. Price failed in its last two attempts to break past the 3.550 level and is moving back to test the neckline at 3.400.
A break below this support zone could trigger more losses for LTUCSD, possibly taking it down by 0.150 which is the same height as the chart formation. Stochastic is on the move down, which means that sellers are in control, while RSI is also heading south.
However, the 100 SMA is safely above the longer-term 200 SMA, which means that the path of least resistance is to the upside. If this short-term reversal signal inspires a correction, LTCUSD could still draw support at the 100 SMA or 3.350 area or the 200 SMA at 3.250.
Further losses past those levels could put LTCUSD on track to testing the lows at 3.100 or much lower.
Potential catalysts for a strong move today include the release of US existing home sales and the CB consumer confidence index. Data from the US has been weaker than expected yesterday, as the flash manufacturing PMI fell from 52.4 to 51.0 versus the projected dip to 52.3.
In addition, dollar demand has been fading due to lower expectations of a Fed hike in March. However, risk aversion has also been influencing LTCUSD action, with risk-off moves weighing on the cryptocurrency.
Much of this has been a result of the ongoing Brexit issue, which is driving money out of higher-yielding currencies and European assets onto safe-haven ones like the dollar and yen. A continuation of this type of price action could mean more losses for LTCUSD.
On the other hand, the commodity price bounce is supporting cryptocurrencies and overall risk appetite, although it remains to be seen whether this market behavior could last or not. Hopes of an OPEC deal to cap production are keeping commodities afloat but if this plan fizzles, a sharp drop could take place.
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