Litecoin has erased the recent gains of more than 6% with a sharp decline in excess of 5%. As mentioned in my previous analysis Sideways Action, traders utilized the rise to create bearish trades on Litecoin which has seen the price drop down to $3.676.
While the price looks to consolidate, I think we may see a good downward action by the end of this week. Why do I think so? Read on below to know the technical considerations which compel me to arrive at this conclusion.
Litecoin Chart Structure – The daily LTC-USD price chart above clearly implies that the marked resistance is proving to be a tough hurdle for the bulls to cross. The chart structure remains that of a lower top, lower bottom and a new low may well be on the way.
Moving Average Convergence Divergence – MACD has declined further to touch 0.0301 while the Signal Line has depreciated to 0.2605. The Histogram sustains in the sub-zero region with a value of -0.2303.
Momentum – The Momentum reading has snapped the two-day winning streak, trimming the recent gains as it falls to -1.5618 from yesterday’s -0.3710.
Money Flow Index – The MFI has settled at a new 1-month low of 32.8805.
Relative Strength Index – The RSI reading has undergone a marginal cut from 48.9089 to 46.9082.
The technical indications are deteriorating while the price upholds near the resistance. This divergence may cause a price decline in the coming sessions, and this time we might see a new low. Market participants should continue to remain short on Litecoin and utilize rallies to exit the counter or create fresh trading positions. Also, the trades should be placed by following a risk-reward ratio of at least 1:2.5. Keep a stop-loss above the resistance line.
In case the price slumps to near $3.100, cover all the short positions and add light long positions.