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After a sharp spike off a support level, litecoin price is still exhibiting a steady downtrend and is testing the moving average on its 1-hour time frame from Bitfinex. If the short-term MA (red) continues to hold, price could retest its former lows and perhaps make new ones.
Technical indicators on the same time frame confirm that the cryptocurrency is set to weaken in the short term.
- The shorter-term EMA (red) is moving below the longer-term EMA (green), confirming the presence of bearish pressure.
- In addition, the moving averages are edging further apart, which means that the selling momentum is getting stronger.
- Stochastic is on middle ground but is pointing up, indicating that a quick retracement could be possible before litecoin price falls further.
- The oscillator is on its way down towards the oversold area so there could be a chance that more sellers would hop in the downtrend.
- Another selloff could mean a test of 1.00, which held as support in the previous drop.
Digital currencies have been trading lower against the dollar in the previous week, mostly because risk aversion has extended its stay in the financial markets. The safe-haven dollar drew more appeal against the riskier cryptocurrencies, as news on the BitLicense regulation have led to doubts that the industry could be in for more developments.
Longer-term technical analysis on litecoin reveals that the downtrend has been persisting for quite some time, with shallow pullbacks on profit-taking. On its daily chart, it can be seen that litecoin price has just finished a market correction.
Litecoin Price Analysis – Conclusion
Litecoin price has weakened significantly as the longer-term downtrend has remained intact and increased regulation in the cryptocurrency sphere threaten to limit innovation. Stochastic and moving averages on the 1-hour time frame confirm that the selloff is likely to carry on, even as buyers jumped in on the recent test of 1.00 support.
