Bears have stomped on all bullish expectations as the expected bullish double bottom gets transformed into a bearish Triple Top pattern. The sell-off can be partly attributed to the profit booking in the leading cryptocurrency, Bitcoin. Each Litecoin is currently worth $1.97 and the price may head lower from here on.
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Technical analysis implemented on the 240-minute LTC/USD price chart connotes that the value of each Litecoin may drop to $1.88.
Bearish Triple Top Pattern Confirmed – Litecoin had been trading between $1.98-2.08 since March 10, registering 5 major price reversals. As the chart analysis reflects, the sixth reversal never happened and the price closed below the crucial support level. With this breakdown, the focus has shifted to the next support level of $1.88.
MACD – The negative Moving Average Convergence Divergence readings also puncture the bullish sentiments. The MACD value of -0.0097 and the Histogram value of -0.0060 are sufficient to warrant an exit from long positions.
Momentum – The Momentum indicator value of -0.0740 is a worrisome sign. The momentum may continue to favor the sellers if the altcoin is unable to stage a turnaround very soon.
Relative Strength Index – RSI offers no respite either as the value slips to its lowest level of 39.7104 in March. A collapse in the strength index reading makes the currency extremely vulnerable to negative price shocks.
As for the trading strategy, short positions can be built in Litecoin for a target of $1.88 while keeping a strict stop-loss above $2 (closing basis). All long positions must be squared off for now and fresh buying should be postponed until convincing signs of reversal emerge or the currency gets extremely oversold. Market participants must also observe the movement in Bitcoin prices as the leading digital currency continues to have a prominent effect on other altcoins.
