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Bulls have faltered in their upward march and given to the bears an opportunity to gain control. As a result, technically important support levels have been breached which could lead to more losses in the value of Litecoin.
In my previous analysis, From Resistance to Support!, I did mention that all the long positions must be built with strict stop-losses. Since the supports have been breached, a lot of long positions may have been squared.
Litecoin is down 1.66% to $1.771 since yesterday.
Image: https://www.tradingview.com/x/RJniKHLO/
Technical analysis of the 240-minute LTC/USD price chart reveals that market participants should look to at least exit the counter if not go short on it.
Litecoin Chart Structure – After cracking the upward sloping support line, Litecoin slipped to $1.740, near the previous low of $1.719, and then rose again to the present level. However, according to technical analysis, the breached support will now act as a hurdle. The resistance is calculated to be $1.790.
Fibonacci Retracements – This tumble also saw Litecoin violate the 38.2% Fibonacci retracement level of $1.792 and head down to the support provided by the 50% retracement level of $1.731.
Moving Average Convergence Divergence – In accordance with the price fall, the MACD indicator also slipped below the Signal Line. The latest MACD, Signal Line and Histogram values are 0.0070, 0.0155 and -0.0085 respectively.
Momentum – Presenting a bearish outlook, the Momentum indicator has a reading of -0.0290.
Relative Strength Index – The RSI indicator reading fell sharply from above 60 to 49.2254.
Conclusion
Litecoin has pierced through crucial support levels, and it is up to the bulls now to repair the damages. However, until they gather strength, it would be wise to sell the cryptocurrency and wait for lower levels. Aggressive traders can also short near $1.785 by placing a stop-loss just above $1.795.
