• Francisco Hernandez

Litecoin (LTC) Resists the Dark Side & finds the Light

LTC-USD, 1D, BTSE


Overview

Litecoin (LTC) has been on a dark path with a downward trend since the high of June 2019 (i.e., ~$145.88). Finally, LTC hit a low of ~$35.94 on December 18th, 2019. Since then, LTC has made an ~80% (or ~$29) gain to a current high (as of writing) of $64.07. Additionally, LTC has broken past the downward trend line (thick red, diagonal) and has found new support. Overall, Litecoin is looking bullish and is now on the path towards the light.


Trend Line

The trend line is the upper band (i.e., 1 standard deviation) of a linear regression channel running from the high of June 2019 to the present. Notice how the line acted as brief support which then broke down around August 10th, 2019. From there, the trend line acted as resistance around September 19th and November 10th, 2019; and again, around January 13th, 2020. This is where Litecoin (LTC) had a significant break out past the resistance line and tested it as new-found support on January 24th, 2020.


Fibonacci Retracements

Plotted as green and red horizontal lines are three Fibonacci retracement levels from the high of June 2019 and low of December 2018. Litecoin (LTC) was able to break past the 78.6% resistance level and is now considered an old support level (green) at ~$49. Then, there are the two resistance levels (red) at 61.8% (~$70) and 50% (~$84) retracement. Based on LTC's current performance, it has a good shot at hitting the $70 area before the close of today, if not, within next few days. Should price find support around the $70 area, the next level of resistance can be expected around $84. Should the $70 area act as resistance, price movement might range between ~$60 and ~$70.


Bollinger Bands (BB) and Moving Averages (MA)

Litecoin's (LTC) price had been riding the upper Bollinger Band (white) peaking and closing above it on January 17th, 2020. A retracement followed with prices moving towards the middle band (red wavy line; aka the 20-day moving average). LTC bounced of the middle band making a new reaction high above the current upper BB.


This sequence of price movements forms a non-confirmed M-top pattern (a trend reversal signal). A M-top is confirmed when the reaction high (off of the middle band) fails to reach past the upper BB and closes below it. Final confirmation comes when prices break past the previous bounce (~$53) and prices fall further downwards. However, these confirmations have not happened yet. There are still about 8 hours until the close of the day. If prices close at current levels (above the upper BB), then the M-top has failed to form. This suggests potential for continued momentum with the two peaks of the M acting as support around the $65 range.


Additional support comes from the fact that the price is above all three moving averages. Lastly, the 50-day MA (orange) is approaching the 100-day MA (yellow) which could potentially set up a golden cross (a bullish signal where a shorter MA crosses over a larger MA).


Indicators

On Balance Volume (OBV)

The OBV has made a high and a higher high within the last week. To confirm continued momentum, I would like to see the OBV create a third higher high. Specifically, I would like this high to break past the previous high around November 10th, 2019 (i.e., ~-2,000,000). OBV is following the general trend mentioned above and is pointing upwards.


MACD

The MACD has been floating on the underside of the zero-line since August 2019. It has finally broken past the zero-line and into the upper zone. Additionally, the MACD line (blue) has recently crossed over the signal line (red), indicating bullishness when taken into consideration with the general trend and the OBV. Finally, I would like to see the MACD line and signal line continue upwards around or past the 4.0 range to form a higher high.


CMF

The CMF has continued to make both higher highs and higher lows. Again, taken in conjunction with the OBV, MACD, and general trend, the CMF is also suggesting potential for continued upward movement as it is also pointing up. However, like the other indicators, I want to see a third higher high to feel more confident. The CMF must move around 0.3 range or higher to create a higher high.


Conclusion

Taking everything into consideration, Litecoin (LTC) is performing well and looks bullish. LTC has both old and new-found support including the Fibonacci level around $49, all three moving averages (i.e., ~$48-59), and the resistance-turned-support trend line (i.e., ~$50). Additionally, all three indicators are pointing upward, suggesting continued momentum (preferably making higher highs). Despite all the evidence, I would rather wait until the end of the day to confirm that the candle closes above the upper BB. This is the only thing that is left to be seen. Once this happens, I'll feel more bullish at least through February. Should momentum be stifled by the upper resistance levels (i.e., ~$70 or ~$84), I expect price action between the respective resistance level and around the $60-65 range. Otherwise, LTC will find support around the $70 range and price movement would then be likely between that support and ~$84.

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