Litecoin (LTC) has been losing ground since February, but the price has just made a bullish breakout from a short-term bullish pattern
If the daily close confirms this bullish breakout, we can expect LTC to rise towards the long-term resistance area.
Litecoin finds ground after falling
As the results of technical analysis of the weekly chart show, the prospects of LTC look quite cloudy. The price dynamics and the RSI indicator give contradictory signals.
On the one hand, the token formed a double top (red icons). Moreover, this pattern was created inside the $100 resistance area, which increases the significance of this bearish pattern.
In addition, the timeframe is signaling a bearish divergence in the RSI (green line).
We can speak about bearish divergence, when the growth of price is not accompanied by the growth of momentum. Often this results in a drawdown of the coin.
On the other hand, however, there are also bullish signals.. So, after the formation of tops LTC drew long bottom wicks (green icons) on the chart.
These are positive signs, meaning that sellers have not been able to sell the price down.
As a result, the power was taken over by buyers, which led to the appearance of a higher closing price on the chart compared to the minimum.
The BeInCrypto editorial board recently told about the Litecoin project and its native token unexpectedly benefited.
Last week, the BeInCrypto editorial board described how the Litecoin project and its native token unexpectedly benefited amid the problems that arose in the bitcoin network.
Further, the Relative Strength Index (RSI) shows a bullish.
It is a momentum indicator indicating overbought/oversold and bullish/bearish market sentiment, depending on whether it is above or below the 50 mark.
In this case, the bounce of the index from the 50 mark can be regarded as a bullish sign.
The latest cryptocurrency news, analytics and forecasts – all the most interesting in our Telegram news channel. Subscribe so you don’t miss anything important.
LTC: Is Bullish Breakout Viable
While the weekly timeframe paints a contradictory picture, the daily chart is more unambiguous and optimistic. First of all, the price is moving within a descending parallel channel.
This pattern is considered a corrective pattern, so its southerly direction implies that the broader trend of the currency is bullish and the price will eventually break north out of this channel.
In addition, the LTC exchange rate has already pierced the resistance line of this channel, although to confirm a bullish breakout we need to wait for the daily close above this level.
Second, Litecoin managed to recover above the support level of the average price of $79 after previously falling below it (green icon).
This could indicate that the sellers did not have enough strength to push the price lower, and could potentially cause the price to move higher after such a deviation.
The support area of $79 is more significant because it is represented by horizontal support as well as the Fibo 0.618 retracement level.
The support area of $79 is significant because it has horizontal support and also the Fibo level of 0.618 of retracement.
The Fibonacci levels are traditionally thought to be the most likely placeholders for price stalling and reversal after a major advance in any one direction.
As expected, at these levels, the market can win back some of the distance traveled and only then resume the movement in the original direction.
In addition, they can determine the ultimate levels of price movement.
And finally, the RSI index on the daily time frame is showing an uptrend and is now rising above the 50 mark (green circle).
This indicates the probability of LTC rate growth in the direction of long-term resistance in the area of $100.
In the meantime, a close below the channel resistance line would cancel Litecoin’s bullish breakout and cancel the bullish scenario for the coin. In this case, it is possible to fall to the support area of $68.