Consolidation within Consolidation: Litecoin has rebounded from the low of the year at about 1.10 to about 2.45 before falling back towards the middle of this price range. It has since been consolidating in a smaller range roughly between 1.80 and 2.05.
Setting up for a Breakout: The 4H chart shows a market that has turned sideways as the moving averages went from sloping down with bearish alignment, to moving sideways in a cluster. With price moving up and below these moving averages (200-, 100-, and 50-period), we know the market is losing direction but also gathering its breath for another move.
Litecoin (LTCUSD) Daily Chart 24/2/2015
(click to enlarge)
Breakout Scenarios: Within the short to medium term, a break above 2.05 is bullish with the 2.40-45 area in sight. Below 1.80, litecoin would be pressured towards the 1.10 low. With the prevailing downtrend still intact, we should favor the bearish outlook and limit the bullish one.
The daily chart shows litecoin in a bearish trend. With price still under the 200-, 100-, and 50-day SMAs (except for slight violation of the 50-day SMA), we can see that the bearish bias is still in play. Also, the RSI holding below 60 was a sign that the bearish momentum was also still in play. The preference for the bearish outlook means minding the 2.40-45 area as resistance especially because it is reinforced by the 100-day SMA.
What do you think? Will litecoin reach parity (1.00) with the USD before finding support? Or do you expect price to push above 2.50 and open up a bullish correction scenario for the medium-term. If so, where would you sell or would you hold? The 3.50 area for example is a key support/resistance pivot in Nov/Dec. 2014, and also where the 100-day SMA resides, so maybe that is the next key resistance if price does make it above 2.50.