Litecoin (LTC) has been declining since mid-February. It is now trading within a short-term bullish pattern, but the long-term trend is still bearish.
Litecoin gives bearish signals
As the results of technical analysis of the weekly chart show, LTC has been rising since June 2022 and reached a yearly high of $105.80 in February 2023.
However, the price failed to overcome the long-term horizontal resistance at $100. It bounced twice from this level (red icons).
As a result of these bounces, a double top was formed on the chart. This is a bearish pattern, which can cause LTC to fall significantly.
Soon after the appearance of this pattern, the price began to fall.
In addition, the weekly Relative Strength Index (RSI) is giving unfavorable signals for the coin.
It is a momentum indicator which indicates overbought/oversold and bullish/bearish market sentiment, depending on whether it is above or below the 50 mark.
It formed a bearish divergence signal amidst a double top. We can speak about such divergence when the price growth is not accompanied by the momentum growth.
Right now, the RSI is near the 50 mark, and its drawdown under this line will confirm the bearish trend. The latest news on cryptocurrencies, analytics and forecasts are in our Telegram channel.
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Can LTC reverse the bearish trend?
The shorter 6-hour timeframe paints a more positive picture for LTC. It suggests the potential for a bounce in the price, at least in the short term.
There are three factors in favor of this scenario. First, the token is trading inside a descending parallel channel.
This pattern is considered corrective, so its southward direction suggests that the broader trend of the currency is bullish and eventually the price is likely to make a breakout to the north from this channel.
In addition, LTC is trading at the top of this channel, which further increases the likelihood of a bullish breakout.
Second, Litecoin recovered above the $79 support area after a brief drawdown below it (red circle).
Usually after such price deviations the rally starts, because it means that the sellers failed to sell the price down.
Support at $79 was formed by horizontal support and the Fibo level of 0.618 retracement. That makes it a very strong area.
And finally, the 6-hour RSI is rising, advancing above the 50. This rise and the exit from the oversold zone are bullish signals.
A bullish breakout from this channel could propel LTC to the next resistance at $92.
In the meantime, a drawdown below $79 would cancel the short-term bullish outlook. In this case, Litecoin may weaken to $68.