Litecoin has posted muted gains of 1.12%, in line with Bitcoin. It is currently trading at $4.318.
In my previous technical analysis titled Dead Cat Bounce, I mentioned that Litecoin should face resistance near $4.500. The cryptocurrency did reach $4.440 before retreating.
Apart from this, the technical indications are highly mixed.
Litecoin Chart Structure – There is no significant price action that has taken place in Litecoin. It is broadly a lower top, lower bottom structure, and there is a good probability that it stays that way.
Fibonacci Retracements – The 23.6% Fibonacci retracement level has expectedly proved to a roadblock to Litecoin. Above this, bulls should find momentum going in their favor.
Moving Average Convergence Divergence – The rise in price fails to translate into gains for MACD or Histogram. MACD is at 0.0695, Signal Line reads 0.1361 while the Histogram is at -0.0666.
Momentum – The Momentum indicator also fails to rise above the 0-mark and struggles at -0.2518.
Money Flow Index – The MFI is holding its ground relatively well with latest value of 66.2421.
Relative Strength Index – The RSI maintains its unbiased stance even today. The latest value is 51.0509.
Technical indicators, MACD and Momentum, suggest a bearish outlook for Litecoin while the Money Flow Index is the sole positive.
However, with the help of Bitcoin, we can expect what’s coming in for Litecoin. Bitcoin is currently testing the crucial resistance of $285 (read more about this here) and a positive breakout will most probably lead to a surge in Litecoin as well. Similarly, if Bitcoin fails to advance beyond the supply zone and falls, expect a similar fate in Litecoin.
Therefore, market participants are strongly advised to keep track of the Bitcoin market and then trade following the resistance levels mentioned before and practicing stop-losses. Indulge in trades with a risk-reward ratio of 1:2.5.