LTCUSD has staged a sharp selloff along with other cryptocurrencies after there has been some confirmation that China’s ban on exchanges is official. Price previously broke below a descending triangle pattern as sentiment in the industry took a hit and the dollar has been advancing, but the drop escalated when BTCChina CEO Lee tweeted that they would halt trading by September 30.
LTCUSD is already starting to break below the resistance turned support at the $50 level and might have its sights set on the next support at $37.50. Recall that remarks from JPMorgan CEO Jamie Dimon earlier this week on how bitcoin is a fraud and that the bubble will burst soon also carried over to losses for litecoin.
The 100 SMA is still above the longer-term 200 SMA on the 4-hour time frame so the path of least resistance may still be to the upside, but this could simply be because the moving averages have yet to catch up to the sharp drop.
Stochastic is on the move down to indicate that selling pressure is present, but the oscillator is already dipping into the oversold area to signal that profit-taking might happen soon. RSI has more room to head south so a test of the next floor is possible.
While all this has been going on in the cryptocurrency sphere, the dollar is currently being strongly supported by the idea that US politicians can put their differences aside to push for tax reform before the year ends. Apart from that, positive expectations for the CPI release are also keeping Fed rate hike expectations in play.
Risk factors to the ongoing LTCUSD drop are a potential CPI and retail sales disappointment, which could lead traders to lower odds for FOMC tightening or the balance sheet runoff happening anytime soon. The North Korean situation also poses a persistent threat as any sign of provocation, which usually happens over the weekend, could lead traders scurrying back to digital gold or cryptocurrencies.
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