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In my previous analysis titled Short-sellers have been rewarded!, I had urged market participants to cover their short positions as Litecoin was oversold from a near-term perspective and hence short covering could be in the offing. As can be seen from the chart below, following my previous observation at $2.670, Litecoin jumped a massive 9.5% to hit a high of $2.924.
Litecoin is currently trading up 7.97% at $2.883.
Image: https://www.tradingview.com/x/5TmUlFmH/
Technical analysis of the 240-minute LTC-USD price chart confirms that Litecoin can be shorted now or up to a high of $2.950 by keeping a strict stop-loss above $2.980 (closing basis).
Litecoin Chart Structure – Litecoin has re-approached the falling resistance post the recent spike. The cryptocurrency has failed at breaking above this trendline in the past several attempts, and therefore, market participants can continue to expect it to be a stumbling block for the price.
Moving Average Convergence Divergence – MACD and Signal Line align seamlessly in the negative region. The latest MACD and Signal Line values are -0.0196 and -0.0174 respectively. Histogram remains buried in the sub-zero region with a value of -0.0022.
Momentum – The Momentum reading is also negative at 0.0785; a sign that the undertone is still bearish.
Relative Strength Index – The latest 14-4h RSI reading of 49.1800 tells of a market scenario poised evenly in favor of the bulls and the bears.
Conclusion
The swift price advance in the Litecoin price would have surprised those traders who were waiting for further downside. But this is not a market for the greedy, and participants must lock in their profits first. For the current scenario, short on a rise up to $2.950 for a target of $2.800 by maintaining a stop-loss above $2.980 (closing basis). This bearish strategy skews the risk-reward strongly in favor of the market participant.
