LTC price could climb 27% in a bullish setup

In line with the volatile situation in the crypto market, the LTC price has fallen by almost 12% over the past month. Despite this, it appears to be forming a bullish reversal pattern, suggesting a breakout is imminent.

The LTC price is facing the crucial moment

LTC price action since Dec 24, 2021 has formed an inverse head and shoulders pattern. This technical pattern consists of two swing lows of equal depth called the shoulders and a deeper central region called the head.

The setup predicts a 27% gain that will take the price to $75.7, which is determined by adding the distance from the neckline to the low of the head and the breakout point. A breakout around $137.43 is possible due to the steep neckline.

Although this outlook is bullish, LTC price will face multiple hurdles at $143.87, $153.38, and $167.05. All of these pose significant threats to bullish momentum.

LTC price/USDT 4 hour chart | Source: TradingView

The bullish outlook is supported by a 365-day market-to-real-value (MVRV) model. This on-chain metric is used to determine the average profit/loss of an investor who bought LTC in the past year.

As the index fluctuates at -25.9%, most holders who bought LTC over the past year have lost money and this is where long-term holders tend to cluster. Therefore, MVRV is signaling that “digital silver” is in an opportunity zone and a trend reversal is likely.

MVRV 365 days LTC | Source: Mood

More credible for the above technical view is IntoTheBlock’s Global In/Out of the Money (GIOM) pattern, which represents a relatively weak immediate barrier of resistance. Furthermore, this on-chain indicator is also showing that the rally could be capped at $144.05. Because around 600,220 addresses that have bought almost 10.91 million LTC are at a loss (out of the money).

Therefore, the sudden increase in buying pressure is likely to become deadlocked in the near term as holders in this space will find a way to break even.

GIOM by LTC | Source: IntoTheBlock

On the other hand, if there is a breakdown of the 3-day demand zone between $103.82 and $124.06, the price will make a lower low, which will invalidate the bullish thesis. In such a case, LTC could slide lower and form a base around the $93.96 support.

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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