For Litecoin, this would be the first step toward recovery
Bitcoin’s bullish momentum saw Litecoin climb in recent hours as well. On the charts, LTC has posted a 15% rise above the $143 lows to trade at $163.9 at press time, which was impressive. Litecoin bulls still have a long way to go before calls for $200+ can materialize.
If bulls manage to establish $163 as an area of demand in the days/weeks to come, the gains of October might once again be achievable.
The price action in December saw multiple tests of the $140 area in search of buyers. This level held as support and has also served as support in September and major resistance in June, marking it as a significant level.
Similarly, the $163 area (lower red box) has been tested multiple times as both, an area of demand as well as one of supply, since August. At the time of writing, this was the area that the LTC bulls and bears were fighting to control.
However, trading volume has been slightly lower than the previous months’ tests of this area. Above the $163 area lay the 23.6% retracement level at $176. This level was plotted based on LTC’s dive from $413 in May to $103 in July.
LTC has to climb above $163 and $176, and buying volume has to be witnessed before LTC can be said to have bullish strength on higher time frames.
Rationale
The price action’s tale of strong buyers at $143 support was backed up by the OBV, which formed a rounded bottom and could climb higher in the coming days. A continued rise in OBV (higher lows) has to reinforce upward price action to lend the move credibility.
The RSI flipped neutral 50 to support but still had the 60 level (pink) to climb above. This value has been tested in the past when the price also approached the $190 area (upper red box) in search of liquidity. Hence, in the coming weeks, if the price climbed to $190 while RSI climbed past 60, it could indicate that bulls really had regained strength on longer timeframes.
Conclusion
It was still too early to flip to a bullish bias for Litecoin. The rounded OBV bottom combined with the $143 support level defense suggested LTC bulls could be waking up. The 23.6% retracement level at $176 has not been hurdled either. Flipping $163 to demand would be the first step toward recovery.
