Litecoin has posted impressive gains of over 5% during the weekend and crossed crucial technical resistance levels. I never expected bears to lose control of the situation but now that they have, bulls are back into the driver’s seat and look steady to take the price to higher grounds.
Litecoin is currently trading at $1.760, below the base of the previous consolidation zone.
Technical analysis of the 240-minute LTC-USD price chart explains that the cryptocurrency may well be on its way up, but the market participants should take note of the below mentioned price levels.
Litecoin Chart Structure – After a failed reverse H&S pattern, Litecoin has surged sharply to post a higher top and a higher low. The upward sloping trendline will now act as the immediate support to the price while the supply pressure may increase near $1.790, the base of the previous consolidation zone.
Fibonacci Retracements – After retesting the support provided by the 61.8% Fibonacci retracement level of $1.668, the cryptocurrency jumped to violate the 50% retracement of $1.729 and also threatened the 38.2% retracement of $1.790 on the back of strong bullish momentum.
Moving Average Convergence Divergence – On a very surprising note, the technical indicator is portraying negative divergence. The MACD indicator is below the Signal Line as Histogram dips into the negative territory. The recent MACD, Signal Line, and Histogram values are 0.0140, 0.0181 and -0.0040 respectively.
Momentum – The negative Momentum indicator reading of -0.0135 also conflicts the positive undertone.
Relative Strength Index – The RSI indicator, with a value of 57.0421, however, suggests that the strength is in favor of the buyers.
Conclusion
Litecoin has become a buy on dips candidate, however, erratic price action cannot be ruled out, and therefore, market participants must place a stop-loss below the support levels to avoid a huge loss of capital.