While short-term dynamics suggest there may be a pullback, long-term indicators suggest the LTC price will continue to rise to new highs.
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Litecoin tested the bullish breakout level again
As the results of technical analysis of the weekly chart show, the picture for LTC is mostly optimistic. There are several factors to support such a scenario.
Let’s start with the fact that since May 2022, LTC has been trading within an ascending triangle pattern, which is usually considered bullish. Accordingly, such a model usually leads to bullish breakthroughs. In addition, the token has repeatedly tried to overcome the $100 resistance level.
The price began to rise after rebounding on June 15 from the support line (green icon). Last week it broke through the $100 area to reach a new yearly high of $115.
LTC has been declining slightly since then.
The LTC price has declined slightly since then, but it may just be looking to test the $100 area as support and then continue to rise.
Source: TradingView
In addition, the weekly Relative Strength Index (RSI) is bullish. Traders use RSI as a momentum indicator to determine if a market is overbought or oversold, helping them decide whether to buy or sell an asset.
If the RSI is above 50 and the trend is up, it is bullish, and vice versa. In this case the RSI is above 50 and rising, indicating a favorable situation for sellers.
However, it formed a latent bullish divergence (green line), which is a bullish continuation pattern and often leads to a continuation of an existing bullish trend.
LTC forecast: wave analysis supports the rally
In the meantime, wave analysis of the daily chart outlines a bullish outlook. The most likely wave scenario suggests that the LTC is in the third wave (black) of a five-wave bullish structure. Wave three is usually the largest of the five waves. Thus, the bullish breakout shape is perfectly consistent with the possibility that price is in a third wave.
Furthermore, the corrective movement in the presumed second wave (highlighted on the chart) fits this scenario perfectly. Subwaves A and C in this move have a ratio of 1:1 (red).
The most likely target for the top of the third wave is at $135, which gives the 1:3 waves a 1:1.61 ratio. This would also take LTC to the area of long-term resistance of $135, which makes the formation of a local top at this level likely.
The most likely target for the formation of the third wave is at $135.
Source: TradingView
In spite of such a bullish forecast, the closing of LTC below the horizontal area of $100 would mean that the bullish breakout was false.
In that case, the most likely scenario would be for the price to fall to the upward support line at $80.