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 losses

Source: LIT/USDT on TradingView

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 action

Source: Coinalyze

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.