The data points to a good opportunity to short LTC before the price falls nearly 50%
The data points to a good opportunity to short LTC before the price falls nearly 50%.
While external market factors always influence the price movement of the asset and the crypto market, confidence in the price trend can steer a trader towards a more favorable outcome. This appears to be the case with LTC at the moment.
LTC keeps falling?
Analyzing price patterns provides an interesting observation. LTC has had a similar pattern several times since the price hit an ATH of $388 in May 2021.
First, this altcoin has been operating on a consistent downtrend for over 8 months. This move started with a simple correction that continued the downtrend into 2022. Despite attempts to break this level, it couldn’t last long.
Now the wedge is tightening so it looks like LTC is moving in the worse direction. Although the critical resistance stands above $142, the immediate resistance coincides with the upper trendline at $123.
Why is it likely to go back to $56?
Taking into account the Relative Strength Index (RSI), the indicator’s movement pattern can be observed in bullish and bearish zones.
Since June, the RSI has been stuck in a bearish zone for the first time in 69 days through August 2021. Then the coin was mostly active in a bullish zone for a period of 105 days.
After that, the indicator stays below the neutral line for 70 days between December and February.
Source: trading view
Notably, while the RSI was bullish, there was a 12-day period when the indicator fell below 50.
However, 10 days ago the RSI fell again and stayed below the 50 level for 11 days. Therefore, given the likelihood of the pattern repeating, it can be seen that LTC is in a 69-day bearish zone until April 27, 2022 located.
Additionally, LTC lost 56.68% and 51.44% in both drops. Therefore, if it falls another 51%, Litecoin could slip to $56.
While the price trend represents a more likely move south, on-chain indicators suggest that this can be contained as LTC investors are not easily spooked. Around 84% of all holders are long-time players, so the likelihood of a hedge sell-off is low.
source: Into the block
New investors joined the network during the price decline, but long-term holders also increased by 1.06 million addresses from December to February.
This shows that despite the current conditions, investors still have confidence in the network. Key support currently stands at $104.36 and if LTC falls there traders should hedge against the $56 scenario.
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