Litecoin suffered a major blow to its price action in the last five days courtesy of a massive FUD-induced sell-off. It dropped as low as $74 for the first time since December 2020, but the dip provided a nice discount for those looking to ride the recovery wave.
If you are among those who purchased Litecoin near the low of 9 May, you might also be looking to cash out at a healthy level before additional downside. However, we will have to evaluate Litecoin’s price action in order to understand which levels will likely yield resistance on the way up.
Litecoin dropped by 45% from its March top at $134, to its latest low at $81.29, at the time of writing. However, it was up by 0.07% in the last 24 hours. Mapping Fibonacci levels using the two price points reveals, that bulls’ latest attempt to recover already seems to have pulled back after encountering resistance near the $0.618 Fibonacci level.
The next Fibonacci retracement levels to look out for in the short term include 0.272 and the 0 level. These Fibonacci levels align with the $95.83 and $103.99 price levels respectively in case of a short-term rally by as much as 40%.
Will Litecoin maintain the bullish recovery?
Perfectly timing the market is next to impossible, hence the above price levels are just the key price points to watch in case of a good bullish recovery. The latest spike is taking place after briefly dipping into oversold conditions during 9 May’s trading session.
An additional downside is still possible if the sell-off continues but should be offset by accumulation at lower prices. This might be what is happening with Litecoin considering its heavily discounted price level.
Most LTC holders are currently in the red according to the MVRV ratio. There is more incentive to buy at lower prices than to sell at a loss.
Interestingly, LTC registered an increase in the number of active addresses since 8 May. This is likely a sign of healthy accumulation and it reflects the price uptick in the last 24 hours. It seems LTC is headed for some bullish recovery within the next few weeks. However, investors should be cautious of the potential for an extended crash.