Litecoin could see these levels before continuing its current rally

With the commencement of its recent bullish rally, Litecoin (LTC) finally traded above the 20/50/200 EMA while rising within an ascending channel (white). Meanwhile, the bulls kept testing the $126-resistance.

A sustained close below the $126-mark could propel the alt to retest the $122-$123 zone before the bulls continue their buying spree. Any close below its 20 EMA (red) would lead to a patterned breakdown towards the $120-mark that coincided with its immediate trendline support (white, dashed). At press time, LTC traded at $125.5.

LTC 4-hour Chart

Source: TradingView, LTC/USDT

After the alt plummeted towards its 14-month low on 24 February, the bulls finally stepped in to defend the $90-base. As a result, LTC registered an over 39.52% ROI over the past month. LTC bulls quickly took advantage of the overall perception and flipped the three-month trendline resistance to support.

As it recovered its previous sell-off loss, it found a comfortable close above its near and long-term EMAs. Also, the gap between the lower and upper band of the Bollinger Bands (BB) is decreasing. This reading entailed a continued tight phase in the near term.

While the bears ensure the $126-ceiling, a potential retest of the lower trendline of the up-channel seemed likely. Following this, the bulls would be keen on keeping their edge intact and try to topple the $126-mark. Any fall below the pattern could find testing grounds near the lower band of BB and its trendline support.

Rationale

Source: TradingView, LTC/USDT

The RSI witnessed lower peaks while the price tested its immediate resistance over the last two days. This trajectory revealed a slightly weak bearish divergence of the RSI with the price. Any reversals would continue to find midline support.

Further, the CMF depicted a bullish edge as it endeavored to test the 0.21 level. A fall below this level would affirm a hidden bearish divergence with price.

Conclusion

Considering the current squeeze phase on its BB along with the potential divergences, LTC could see a near-term setback before the bulls gather force to snap the $126-level.

Besides, LTC shares a whopping 86% 30-day correlation with the king coin. A close eye on Bitcoin’s movement would be imperative to make a profitable move.