Litecoin is currently trading up 1.66 percent at $3.489 as the Bitcoin market looks to settle near the crucial support of $220.
However, this is not the complete story. As bears went berserk, Litecoin dived to a fresh 1-month low of $3.160, much closer to my monthly target of $3.000, before bouncing back. The volume registered on the decline was far greater than on the rebound.
But, will this rebound sustain? Let us find out what the latest technical indications are.
Litecoin Chart Structure – While the dead-cat bounce may extend further, I see it facing renewed selling pressure near the previous lows in the vicinity of $3.800. As for a bottom, it is better to adopt a wait and watch approach.
Moving Average Convergence Divergence – MACD has succumbed to yet another low of -0.1657, Signal Line has dropped to -0.1001 while the Histogram has slumped to -0.0655. The first bullish sign would be the positive crossover of MACD and Signal Line.
Momentum – The Momentum indicator is showing a value of -0.4102.
Money Flow Index – The MFI is showing signs of a reversal; the last observation was made at 24.8578.
Relative Strength Index – The 14-day RSI is at 40.6872, indicating that bears still hold the aces.
As I mentioned in my previous Litecoin technical analysis Pure Mayhem, I still do not see a good reason to buy Litecoin at the current level. However, the medium-term chart structure is a strong downtrend and any substantial rise should be used to exit the cryptocurrency or build fresh short positions.
I am expecting the volatility to not die anytime soon, and there may be surprising price moves in the coming sessions as well.
The Bitcoin market is at a make-or-break juncture, and hence market participants must track it for important trading clues.