In yesterday’s Litecoin analysis titled, Pressure Mounts, I discussed the possibility of the altcoin heading lower and recommended shorting. In the last 24 hours, bulls have been decimated as the value dived from $1.97 to a six-week low of $1.60. However, the price recovered to $1.71 as sellers booked partial profits.
The crash in Litecoin price came in conjunction with an absolute slump in the Bitcoin price from $280 to $250. Bitcoin has routinely had a prominent effect on other cryptocurrencies.
Technical analysis on the 240-minute LTC/USD indicates that the sentiment has turned strongly against the cryptocurrency and that further downsides may open up in the coming sessions.
Bollinger Bands – The current Litecoin value of $1.71 remains below the lower level of the Bollinger band, which is symbolic of the relentless selling pressure that continues to strengthen.
Momentum – The Momentum indicator has dropped to a worrisome level of -0.2955. Successively declining momentum reading also reflects the underlying bearish mood.
Relative Strength Index – The RSI indicator has dipped into the oversold region with a reading of 17.4040. The cryptocurrency may gain some strength in the coming sessions, but that is expected to be short-lived as the major trend has now turned bearish.
Commodity Channel Index – The Commodity Channel Index indicates a value of -177.2173. Being a leading indicator, a plunge below -100 signals the start of a new downtrend.
Even while mentioning that the cryptocurrency may stoop to new lows going forward, I would like to mention that Litecoin looks extremely oversold from the near-term perspective and hence, a technical bounce of up to $1.78-1.85 cannot be ruled out. However, if the price rises, it would only be an opportunity to exit all the long positions and initiate short ones. Market participants must also look for any weakness in the leading cryptocurrency, Bitcoin.