The rebound in Bitcoin is supporting Litecoin as well. After slumping to a new monthly low, Litecoin is extending its gains to $3.534, up 1.29 percent.
I think that a further rise in Litecoin will be a good opportunity to go short.
Take a look at the technical considerations of the daily LTC-USD price chart.
Litecoin Chart Structure – If we take a look at the chart above, it can be safely said that Litecoin is in a strong downtrend. With Bitcoin still weak, it is proving hard for Litecoin to unshackle from this range. The resistance according to the above trend comes in at around $3.850.
Moving Average Convergence Divergence –Even though the price is rising, there is no improvement in the underlying momentum reading. The MACD has, in fact, dropped even lower to -0.1697 while the Signal Line is at -0.1118. The Histogram is indicating the lingering bearishness with a value of -0.0579.
Momentum – Another aspect of this advance revealing that it could be a trap is the declining Momentum reading. The Momentum indicator is flashing -0.6105, lower than its previous observation of -0.4102.
Money Flow Index – The MFI has advanced to 32.3032.
Relative Strength Index – There hasn’t been any improvement in the strength measure of Litecoin. The RSI is only marginally changed to 41.7024.
Market participants should consider creating short positions on rise up to the resistance of $3.850 while maintaining a stop-loss (closing basis) above it. Avoid creating long positions in Litecoin as it is still hard to call a floor.
Bitcoin markets are currently sustaining above the crucial support level, however, if another negative hits the market, it may pierce the bulls’ comfort zone and crash. And in case of Bitcoin crashing, it is hard to imagine Litecoin remaining unaffected.