The Litecoin (LTC) price is currently in a precarious position, having broken below a long-term ascending support line and hovering near a critical horizontal support level. The outcome of this standoff will play a pivotal role in determining the future direction of LTC’s price.
Litecoin’s Price Behavior
Analyzing the LTC price on a weekly timeframe reveals a predominantly bearish outlook. In early August, the price experienced a significant breakdown from a 427-day ascending support line. Such breakdowns from long-term structures often signal the end of the previous trend and the beginning of a new one in the opposite direction.
Despite this breakdown, LTC continues to trade within the $60 horizontal support area, which has alternated between acting as support and resistance since May 2022. This area recently triggered a bounce, resulting in a long lower wick on the price chart, indicating buying pressure.
However, LTC also validated the previously breached ascending support line as resistance, a common occurrence following breakdowns.
Key Factors for LTC’s Future
The critical factor in determining LTC’s future trend lies in whether the price breaks up from the $60 support area or experiences a breakdown. If LTC bounces and reclaims the ascending support line, it could lead to a 55% price increase towards the long-term resistance at $100. Conversely, a breakdown from the $60 area could result in a 25% drop towards the nearest support at $50.
Technical Indicators
The weekly Relative Strength Index (RSI) supports the bearish trend, as it currently indicates downward momentum. The RSI is a valuable tool for assessing market conditions, with readings above 50 signaling bullish momentum and readings below 50 indicating bearish sentiment. The RSI is presently below 50 and trending lower, reinforcing the bearish outlook.
Additionally, it’s worth noting that approximately $640 million in Bitcoin options are set to expire, potentially exerting a significant influence on LTC’s price.
Daily Outlook and Potential Reversal
On the daily timeframe, the analysis offers a mixed perspective. LTC has remained below a descending resistance line since reaching its yearly high in July, indicative of a bearish trend. As long as this resistance line remains intact, the overall trend is likely to remain bearish.
However, the daily RSI presents bullish signals. The RSI has broken free from its own downtrend line, exhibiting substantial bullish divergence and moving out of oversold territory. These factors collectively suggest the potential for an upward movement.
The fact that the RSI turned bullish around a crucial long-term horizontal support area further bolsters the case for a potential bullish reversal. Nevertheless, the definitive shift in trend will only occur when the price breaks above the descending resistance line.
In summary, the future of LTC’s price hinges on whether it can break above the descending resistance line or experiences a breakdown below the $60 support area. A breakout could lead to a 55% price increase, while a breakdown might result in a 25% drop.