After hitting a high of $4.85, Litecoin price dropped earlier today to print a low of $4.20 on Bitfinex. As we predicted during yesterday’s analysis, price correction is attempting to pull down the price, yet it is well supported above the $3.62 level which corresponds to the 0.618 retracement level according to the Fibonacci retracement we plotted. (Read yesterday’s Litecoin analysis here).
A Head and Shoulders Pattern on the 1 Hour Charts:
By studying the 1 hour (LTC/USD) charts from Bitfinex (look at the below chart) and plotting the 20, 50 and 100 EMAs, we can observe the following:
- The price is still above the 20, 50 and 100 EMAs during most of the trading sessions and has only fallen below the 20 EMA during only 2 sessions since yesterday.
- Since the bullish wave started on the 29th of October, we can see a “head and 2 shoulders” pattern forming; so according to the below chart, the left shoulder and head have already been formed, yet we still expect to see the right shoulder form another price surge followed by a downwards price correction attempt.
By examining the 1 day (LTC/USD) charts from Bitfinex (look at the below chart); plotting the 20, 50 and EMAs; and executing the Relative Strength Index (RSI), we can conclude the following.
- Litecoin is now overbought as shown by an RSI value of 80 (> 70) and an upwards sloping RSI curve. The overbought market is the reason why the price started dropping after yesterday’s highs.
- Litecoin price is trading at a level that is higher than the 20,50 and 100 EMAs, so we can see another price surge after the price correction stage is over.
Litecoin price is now dropping as the price correction wave is attempting to bring balance to the current overbought market; however, we are still expecting another bullish wave that will be notable after the price correction attempt is over.
Charts from Bitfinex; hosted by Tradingview.com