Litecoin (LTC) has rebounded by 130% to virtually $100 after bottoming out close to $40.50 in June 2022. The first causes embody broadly enhancing risk-on sentiment and euphoria round Litecoin’s upcoming halving in August 2023.
Nevertheless, technicals recommend that LTC could wipe out most of those positive aspects within the coming months.
LTC value paints large bear flag
Litecoin stands to pare its positive aspects primarily on account of a large bear flag on the weekly chart.
A “bear flag” is a bearish continuation sample that happens when the value consolidates inside an ascending, parallel channel after present process a robust downtrend. It resolves after the value breaks beneath its decrease trendline with an increase in buying and selling volumes.
Litecoin has been portray the same sample since early June 2022. Beforehand, the LTC/USD pair had undergone a 70% value correction from $130 to $40.50. Thus, from the technical perspective, it will resume its downtrend course if its value breaks beneath the decrease trendline.
As a rule, a bear flag breakdown transfer prompts the value to fall by as a lot because the earlier downtrend’s size. Making use of the identical setup to Litecoin brings its bear flag draw back goal to just about $30.50, or 65% decrease than the present LTC value.
Litecoin value “head faux”?
As stated earlier, Litecoin‘s value restoration has primarily occurred in keeping with comparable strikes throughout the risk-on market on account of cooling inflation.
As an example, the Nasdaq-100 inventory market index has risen roughly 15.50% between October 2022 and January 2023. Equally, Bitcoin (BTC) has rallied by greater than 50% since its November 2022’s low of round $15,500.
The weekly correlation coefficient between Litecoin and the Nasdaq-100 has been largely constructive at 0.35 on Jan. 27. Equally, the correlation between Litecoin and Bitcoin is now round 0.21.
However Mark Haefele, the chief funding officer at UBS International Wealth Administration — together with different many different analysts — has famous that the continuing risk-on rally could possibly be a “head faux.” In easy phrases, the continuing Litecoin rally, beneath the affect of its risk-on counterparts, could possibly be short-lived.
Impartial market analyst Capo of Crypto additionally agrees, noting:
“The way in which the upward motion is going on, the best way [higher-timeframe] resistances are being examined… it clearly appears to be like manipulated, no actual demand. As soon as once more, the largest bull lure I’ve ever seen.”
Bullish situation for Litecoin
Nevertheless, not everyone seems to be bearish on danger belongings comparable to Litecoin. In style market analyst Rekt Capital sees Litecoin rallying towards $160 within the coming weeks, citing a month-to-month chart setup as proven beneath.
Notably, the chart reveals LTC‘s value present process a robust rebound transfer after testing a multiyear ascending trendline resistance contained in the $40 to $50 space, which might qualify it for an additional uptrend towards the $120–$160 vary.
These upside targets have beforehand acted as helps and resistances. Breaking this key resistance might subsequently invalidate the bear flag setup, which occurs 54% of all time, based on analysis by veteran investor Tom Bulkowski.
This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes danger, and readers ought to conduct their very own analysis when making a choice.
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