Litentry [LIT] posted a huge, sudden rally, but should bulls trust this move?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- LIT’s price action showed another rally from $0.7 was likely
- The downtrend of the spot CVD highlighted the need for buyers to maintain discipline
Litentry [LIT] posted gains that measured 26% on Sunday, 13 August, surging from $0.65 to $0.83. On 14 August, the price climbed a little higher to reach $0.859 before falling quickly. The retracement can be termed healthy, and the higher timeframe structure was bullish.
Read Litentry’s [LIT] Price Prediction 2023-24
Therefore, traders can have a bullish bias. This retracement was still ongoing and technical analysis showed where a potential reversal could occur. A Bitcoin [BTC] rally would massively help the LIT bulls’ cause.
Litentry saw a swift retracement, but the imbalance could halt further lossesThe market sentiment has been bearish in August. Most altcoins faced losses as BTC stagnated at the $29.4k area, although it did climb to $30.2k once. Litentry was one of the altcoins that had been in a lower timeframe downtrend since 24 July.
This changed on 13 August when LIT saw the aforementioned pump. This spike was so large that the market structure was flipped bullishly on the 1-day chart as well when the recent lower high (green) was breached. The On-Balance Volume (OBV) saw a large surge to highlight elevated buying volume. The Relative Strength Index (RSI) also reflected the sudden bullish momentum when it soared to a reading of 90.
Buyers can look to enter long positions on LIT once again. The Fibonacci retracement levels showed 61.8% and 78.6% retracement levels at $0.731 and $0.696. Moreover, a fair value gap (white box) on the four-hour chart was also present in this region. The confluence of these factors showed that LIT bulls could drive a rally from the $0.7 region.
The bullish idea would be invalidated if prices fall beneath the 78.6% level and the Fair Value Gap (FVG). To the north, the target for buyers is the local high at $0.859 and the 23.6% extension level at $0.908.
The spot CVD was at odds with the recent price actionThe Open Interest almost tripled during the LIT rally. This signified a huge influx of capital into the market of this relatively small-cap coin. While the Open Interest (OI) signaled strong bullish sentiment, the spot Cumulative Volume Data (CVD) raised concerns.
Realistic or not, here’s LIT’s market cap in BTC’s terms
The CVD went against the findings from the OBV. It showed that the past 24 hours saw a large wave of selling in the spot market of LIT. This hinted at a false breakout for LIT.
Litentry had a technically bullish structure and approached an area of interest on the chart. Buyers can wait for a bullish structure break near $0.7 on the H1 and H4 charts, but since this could be a risky trade the position size must be carefully managed.