Litecoin has approached a critical juncture at the 50% Fibonacci Retracement level. A daily close above the $190-mark would allow LTC to overturn a stubborn resistance and be in hot pursuit of its September local high.
If bullish momentum wavers over the coming week, bears could take advance of the chinks in LTC’s armor and initiate a drawdown back towards the $140 support. At the time of writing, LTC traded at $187.5, down by a marginal 0.8% over the last 24 hours.
Litecoin Daily Chart
Source: LTC/USD, TradingView
The Visible Range Profile indicated that a considerable amount of selling pressure was available for Litecoin between the 23.6% and the 50% Fibonacci Retracement Levels. To overcome this supply zone with conviction, LTC would need to target a daily close above $190 on healthy trading volumes.
A bullish crossover between the 20-SMA (red) and 50-SMA (yellow) had already laid the foundations for LTC’s price progression. Moreover, the lack of strong resistance levels above $194 could see LTC close the gap between its September high of $232 rather quickly.
On the flip side, a failed breakout attempt could see bears initiate a move below the 38.2% Fibonacci level. LTC’s bullish-bias would severely be threatened if the price collapses below the 23.6% Fibonacci level.
In this case, a defensive resource at $140 would be LTC’s best chance of a recovery. Having said that, such an outcome was rather unlikely considering a risk-on broader market.
ReasoningÂ
Now the Relative Strength Index’s recovery above the half-line was certainly a positive sign. This development lent credence to LTC’s price action, which was expected to generate additional buying pressure over the mid-long term.
Even the Directional Movement Index’s pictured further upside as the +DI line traded above the -DI line. However, a weak ADX reading of 17 meant LTC could continue to trade sideways before gathering numbers for a breakout.
ConclusionÂ
LTC was approaching a make or break moment on the chart. A close above the 50% Fibonacci level could see LTC shift gears and explode towards $233 before the next wave of selling pressure hits the market. However, expect bears to be active as long as LTC trades below the $194-mark.
