The 37% Litecoin (LTC) price rally in November threatens to dry up, as the “silver cryptocurrency” indicates the formation of a double best chart pattern.
The classic bearish reversal setup occurs when price hits two consecutive highs of roughly the same level, with each upward move hitting a sharp correction towards a common support known as a “cutout”.
Usually the price breaks below the support and drops the maximum amount between the double prime top and the neckline.
So it appears that Litecoin is about to form a double top pattern as shown in the table below.
Specifically, the LTC price peaked at $ 295.50 – its first high – on November 10, before correcting down towards the neckline support at $ 249 in progress.
Litecoin needs to extend the sell-off to retest the clipping. Meanwhile, a break below support will trigger a double major breakout setup, with a profit target near $ 200.
Bitcoin correlation
Litecoin bearish reversal pattern comes when US inflation rises to a three-decade high, prompting investors to seek hedges for various financial instruments.
For example, the most actively traded gold futures contract recently hit its best week in six months, rising 2.9% to $ 1,868.50 an ounce after the US Department of Labor released a price index last year. -Year. This is the fifth month in a row with inflation above 5%.
Many investors / traders turned to Bitcoin after viewing it as a safety net against rising inflation, said Wilfred Daye, head of Securifying Cash, Securifying Inc.’s wealth management division. Price fluctuations.
“We don’t have a long enough history to say that Bitcoin is really an inflation hedge,” said Daye.
“I think gold is still a better protection against inflation. But bitcoin as an inflation hedge is a sexy new concept – people love new ideas. “
Bitcoin’s growth has also given altcoins a boost thanks to its broader influence on the crypto market. Litecoin was one of the beneficiaries of the rally as its year-long performance correlation with Bitcoin is at .71 above, according to data from Crypto Observe.
As a result, worries about persistently higher inflation have proven to be a lucky godsend to earn Litecoin over Bitcoin. This could help undermine the bearish double leading setup pictured above – and confirm a bullish pattern that has been in the works since late last week.
Litecoin “Bull Pennant” sets the LTC target at $ 350
The bullish continuation pattern, also known as the bull pennant, occurs when prices consolidate sideways after a strong upward movement within the triangle structure. Traders confirm a bullish breakout when price breaks the upper trendline of the triangle in strong volume.
Related: Litecoin hits 6 month high as LTC price rose 20% in 24 hours
In doing so, they keep their profit target at a length that corresponds to the height of the previous uptrend (also known as the flag pole). As a result, the Litecoin price moved in the direction of an extended uptrend towards USD 350, as shown by the setup in the graph below.
In the meantime, risk-free following a clear uptrend will trigger a double prime setup. This provides “months of upward trendline support” as the next downside target in the event of an accidental bearish collapse, a target also near $ 200.
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