Litecoin buyers responded to oversold conditions on the daily Relative Strength Index (RSI) with a 35.7% rally over the next ten days. The impulsive response closely tracked Bitcoin’s movements, but ultimately fell short of triggering a decisive ‘double bottom’ scenario.
Consequently, the cryptocurrency has been coiling up within a tight range ($135.6 – $149.9), revealing a potential upside resolution of 30% for investors.
The Litecoin opportunity
Litecoin price closed on a positive note for ten consecutive days from July 21 to July 30, marking the first ten-day gain since 2017 and creating the confidence that LTC had established a firm correction low on July 20.
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Since then, LTC/USD has been consolidating both above the the 2019 all time high (close) and the pivotal 200-weekly moving average (from a macro perspective).
If LTC/USD successfully breaks to the upside on the daily time-frame, the trend would be conducive to a broader reversal in accordance to compelling historical precedent. To confirm the bottom and resume the longer-term rally, LTC/USD must close the week above $150, and begin closing above the 20-weekly EMA $165 shortly thereafter. Both targets open the door to the 38.2% Fibonacci retracement ($220), where selling pressure could kick in.
On the flip side, if the market is unable to rally, a retest of the psychological $100 price-tag could be in the works. Notably, should bitcoin and the cryptocurrency market turn bearish, the altcoin could erase the 10-day strong rally and then some.
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