Litecoin’s bullish technical pattern, the Reverse Head Shoulders has failed, in line with my expectations. The price has dropped 1.70% to $1.671, just inches away from the strong support level of $1.669. I am expecting this base to be violated in the coming sessions and see sub-$1.600 levels for the cryptocurrency.
My bearish outlook is well supported by the technical considerations derived post an analysis of the 240-minute LTC/USD price chart.
Litecoin Chart Structure – Earlier, Litecoin faced stiff resistance from near $1.690 level but eventually crossed this barrier on low fuel. As a result, the price failed to take off and has instead declined, this time breaching the Reverse HS pattern neckline on the downside.
Fibonacci Retracements – The cryptocurrency is spending ample time near the 61.8% Fibonacci retracement level of $1.669. A break of this level could result in a steep decline below the $1.600 mark, and bring the price closer to the 76.4% retracement level of $1.594.
Moving Average Convergence Divergence – The Histogram has narrowed the gains as Signal Line fast approaches the MACD indicator. The MACD indicator currently reads -0.0097 while the Signal Line reads -0.0110, thereby giving the Histogram a marginally positive value of 0.0013.
Momentum – That momentum is going downhill is further corroborated by the negative Momentum indicator value of -0.0247.
Relative Strength Index – The underlying strength has registered a dip in concurrence with the price drop. The 14-4h RSI value has come in at 43.8156.
Litecoin may experience a price buoy at the current level, but I expect it to be short-lived. Market participants should focus their attention (and funds) to creating short positions on any rise. Stop-loss should be placed just north of $1.6900 while the near-term downside target remains $1.590. Brace yourself for a big move in the next 36-48 hours.
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