- Litecoin price started to correct lower as forecasted in yesterday’s post, as sellers defended the $3.50 level successfully.
- There is an important trend line and support area formed on the hourly chart (data feed via Bitfinex), which may act as a catalyst for the price moving ahead.
- Looking at the 2-hours chart (data feed from HitBTC), there was a bearish trend line that prevented gains and pushed the price down.
Litecoin price after surging higher found sellers, and the $3.50-55 levels acted as a perfect resistance to ignite a short-term correction.
Can Trend Line Hold?
Yesterday, I highlighted that the price surged higher, but may face sellers near a major resistance area of $3.50-55. The stated level was defended successfully, as the price started to correct down. We can see it the highlighted failure was very important, taking the price down. The price even traded a few points below the 38.2% Fib retracement level of the last wave up from the $2.97 low to $3.44 high. Now, looking at the hourly chart with the data feed from Bitfinex, there is a bullish trend line formed.
The highlighted trend line and support area may play a key role in the near term, and may ignite the next move. The price is currently testing the 50% Fib retracement level of the last wave up from the $2.97 low to $3.44 high. A break below the trend line and support area may call for more losses in the short term. The next level that can be tested in that situation could be the 76.4% Fib retracement level of the last wave up from the $2.97 low to $3.44 high. The main thing to note is the fact that the 100 hourly simple moving average is just above the stated fib level.
So, we can consider the trend line and support area as a major barrier for buyers, and if they succeed in breaking it, then sellers may gain control. Looking at the 2-hours chart with the data feed from HitBTC, there was a bearish trend line, which acted as a resistance and stalled gains. The highlighted trend line and resistance area was coinciding with the $3.50-55 levels, which means it was a perfect failure calling for a correction.
Now, we need to see whether the current wave is a correction or a trend change. The price also tested the 76.4% Fib retracement level of the last drop from the $3.65 high to $2.99 low and reversed. However, there is one positive sign for buyers, as the price is holding the 100 simple moving average (2-hours chart with the data feed from HitBTC). So, we need to keep a close eye on the 100 MA to know which way the price may head next in the short term. A break below it may call for more losses.
Looking at the indicators:
Hourly MACD – The MACD is about to change the slope to the bullish zone, suggesting an up-move ahead.
Hourly RSI – The RSI is below the 50 level, which is warning sign for buyers.
Intraday Support Level (Bitfinex) – $3.16
Intraday Resistance Level (Bitfinex) – $3.35
Charts from Bitfinex and HitBTC; hosted by Trading View