Litecoin falls more than 8% to $4.569 as weakness in Bitcoin increases. I had been maintaining that the rise in Litecoin was mainly on account of a strengthening Bitcoin, and Bitcoin’s failure to cross the resistance may lead to a decline in Litecoin as well.
With this decline, Litecoin has provided a short-term buy opportunity at low risk. Read on below to find out how.
Litecoin Chart Structure – Litecoin’s recent consolidation occurred at around $4.560-4.570 and the current valuation makes it a low-risk buying opportunity.
Fibonacci Retracement – As Litecoin heads south, it is expected to witness fresh buying near the 23.6% Fibonacci retracement of $4.471.
Moving Average Convergence Divergence – MACD is sustaining above Signal Line in a positive display of momentum. The latest MACD, Signal Line and Histogram values are 0.1890, 0.1121 and 0.0769 respectively.
Momentum – Expectedly, the Momentum indicator registered a dip in its reading. From yesterday’s 1.3726, the value has gone down to 0.6607.
Money Flow Index – One point of concern is the rapidly advancing MFI value. The MFI has leapt to 75.7191 while the price declined. A value at or above 80 is considered overbought.
Relative Strength Index – The underlying strength has eased a bit following the price decline. The 14-day RSI value now stands at 54.0656.
The recent dip in Litecoin can be used to go long in the counter, however, a stop-loss must be placed below $4.360. If the price breaches the mentioned stop-loss, it will threaten bulls’ chances of reversing the lower top, lower bottom chart structure.
Since both Bitcoin and Litecoin are closer to their near-term support levels, and Litecoin usually tracks movement in Bitcoin prices, a crack of support in Bitcoin will lead to a fall in Litecoin as well. Therefore, market participants must follow the Bitcoin markets.
Note: I am bearish on Litecoin.