Litecoin has crashed more than 16 percent intraday to hit a one-month low of $3.300 following the breakdown in the Bitcoin market.
I have been mentioning in the past several analyses that the Bitcoin market is a great precursor to the action in the Litecoin market, and that any negative price action in Bitcoin will be reflected in Litecoin as well. Litecoin is currently trading at $3.432.
The decline has also dashed all the hopes of a trend reversal and has boosted the downward momentum. Technical observations pertaining to the daily LTC-USD price chart have been presented below.
Litecoin Chart Structure – Earlier, when Litecoin unshackled itself from the bearish pressure, it looked as if the cryptocurrency would reach for higher levels. It could definitely have if fresh trouble did not rock the Bitcoin markets. Hence, Litecoin maintains its lower top, lower bottom chart structure.
Moving Average Convergence Divergence – The MACD, Signal Line and Histogram have extended their slump for another day; the latest values now are 0.1448, 0.0866 and 0.0582 respectively for MACD, Signal Line and Histogram.
Momentum – The Momentum reading of -0.4266 is inducing confidence in the bears.
Money Flow Index – The MFI has slumped to 23.9460, in close vicinity to the oversold level of 20.
Relative Strength Index – The 14-day strength indicator had 38.7080 as its latest reading.
Since Litecoin has failed to free itself from the downward bias, it would only be prudent to short Litecoin on rallies. There is no good technical reason to buy Litecoin as of now.
Litecoin may now approach my target for this month of $3.000.
Market participants are also advised to keep track of the Bitcoin market. If Bitcoin breaks and sustains below its extremely strong floor of $220, expect a biblical crash in Litecoin.
Volatility is expected to remain high in the coming sessions as well.