Litecoin might have hit recent 2018 lows Wednesday, however could possibly be in for corrective rally courtesy of oversold circumstances.
The world’s sixth-largest cryptocurrency fell to $93 at 15:10 UTC, the bottom stage since Dec. eight, and is at present buying and selling at at $95.80 on Bitfinex, down 9 % within the final 24 hours.
The 48 % drop from the Could excessive of $182 has turned the tide in favor of the bears. Nevertheless, the sell-off appears to be like overdone because the every day relative power index (RSI) has nosedived into oversold territory (under 30.00) for the primary time in over two months.
Therefore, LTC may revisit $100 (main psychological hurdle) within the short-run earlier than resuming the drop in the direction of $80.
Each day chart: RSI
Presently, the RSI is hovering at 26.00, indicating oversold circumstances. So, the sell-off might run out of steam within the subsequent 48 hours or so.
Curiously, LTC is trying oversold at a time when quick positions on Bitfinex alternate are on the highest stage since Oct. 12.
Often, such excessive market positioning is taken into account an indication that a development is nearing exhaustion. So, a brief squeeze could possibly be within the offing and will raise costs above $100.00.
That mentioned, the broader outlook would nonetheless stay bearish as indicated by a pennant breakdown within the long-duration charts under.
LTC closed at $102 final week, signaling a draw back break of the pennant – a bearish continuation sample indicating that the sell-off from the report excessive of$370 has resumed. So, within the long-run LTC will doubtless check $80.12 (78.6 % Fibonacci retracement of the rally from 2015’s low to 2017’s excessive).
Each day chart: Shifting averages
As of writing, LTC is buying and selling effectively under the 50-day transferring common (MA), 100-day MA and 200-day MA, indicating a long-run bearish setup. Additionally, corrective rallies will doubtless be short-lived so long as the 5-day and 10-day MAs are trending south in favor of the bears.
- The short-term oversold circumstances may pave approach for a minor corrective rally to $100 (psychological hurdle) and probably to $106.
- The long-run outlook stays bearish, so LTC will doubtless check $80 (78.6 % Fibonacci retracement of the rally from 2015 low to 2017 excessive) over the subsequent few weeks.
- Solely a weekly shut on Sunday (as per UTC) above $120 (pennant ground now appearing as resistance) would abort the long-term bearish view.
Litecoin picture through Shutterstock