Litecoin bulls have clawed their way back in as price leapfrogs from $1.98 to $2.06. There may be more good news in store for the investors as several technical indicators and a bullish price chart formation point to a surge in the Litecoin prices. But, for the investors’ wealth to soar, Litecoin will have to cross one major hurdle: closing above $2.08.
Image: https://www.tradingview.com/x/0ydl7tUO/
A comprehensive technical analysis on the Litecoin/Dollar 240-minute price chart taken from www.tradingview.com prominently favors the bulls.
Price Structure – The price structure in the past one week has represented sideways consolidation; oscillating between $1.98 on the lower end and $2.08 on the upper end. It must be observed that the lows never breached the previous resistance levels on the downside, which makes $1.98 an even stronger buying level (marked in the image above). Within this period, Litecoin has registered 4 price reversals and looks set to break out of the range. A close above the strong supply zone of $2.08 will confirm the existing price pattern as “Double Bottom,” failing which the price may remain trapped for a longer timeframe.
The target for the upside, upon breakout, will be $2.17.
Bollinger Band – The resistance level of $2.08 gets reinforced from the upper range of the Bollinger band at $2.0615. But, on a contrarian note, the digital currency has recently closed above the 20-day simple moving average (used in the Bollinger Band) with a strong bullish candle. This bodes well for the cryptocurrency which is aiming for new highs.
Moving Average Convergence Divergence – The MACD indicator has re-entered the positive territory, after kissing the negative levels for a brief period. The MACD reading of 0.0110, the Signal Line reading of 0.0037 and the Histogram value of 0.0073 – all positive – reflect an optimistic undertone of the market.
Relative Strength Index – There is no let up in intensity which is confirmed by the RSI value of 60.86. Interestingly, the RSI value has never dipped below 40 in March which in itself conveys strong bullish intent. Also, the latest rise from $1.98 to $2.08 has been well supported by a proportional rise in RSI.
Momentum – The upside recommendation is further fortified by the positive Momentum indicator reading of 0.0518.
The price chart analysis has confirmed that bulls remain fairly confident even as volatility refuses to die down. Market participants are advised to go long on Litecoin with a target of $2.17 by placing a stop-loss just below $1.98 (closing basis). Those with a low-risk preference can wait for a dip before initiating a trade. Contrarian trades must only be made upon the breach of the support line for a target of $1.87, with a stop-loss above $2.
Litecoin, like Bitcoin, has been struggling to move up following the unprecedented mega rally in US Dollar Index. The US Dollar Index recently hit a 12-year high crossing the 100-mark. However, the Dollar Index looks highly overbought in the near term and profit booking may soon set in. Depreciation in the US Dollar would considerably boost the cryptocurrencies and their prices could surpass major resistance levels.
