LTC short sellers can watch out for a bounce to this resistance level
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- Litecoin did not show signs of a bounce in prices yet, even on the lower timeframes
- The imbalance to the north would present a good risk-to-reward short-selling opportunity for LTC traders
Litecoin [LTC] saw an increase in accumulation on-chain. Yet, the price chart showed that there was a downtrend in progress on the higher timeframe. After the halving, the price fell past multiple support levels.
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The inability of the buyers to defend these demand zones signaled bears were dominant. Over the coming week, it was likely that further losses could ensue for Litecoin. Where can traders look to enter positions?
Litecoin showed an imbalance at $70 that could be retested before rejectionA set of Fibonacci retracement levels (pale yellow) were plotted based on the rally from $70.75 to $115. LTC was already beneath the lows from that rally. The market structure was bearish on the daily timeframe.
Moreover, there was a fair value gap around the $70 area highlighted in white. LTC witnessed a downward move that began on 8 August. It went from $85.47 to $56, and the 50% mark for this move stood at $70.74. This coincided with the low from 14 June that made the bearish breaker block from mid-June.
Hence, a bounce toward the $70.75 level was a possibility in the coming days. It would partially fill the imbalance and also retest the 50% level of the previous drop. The OBV did not support the idea of such a bounce as it has been in a firm downtrend since July.
The RSI was also below neutral 50 since July, showing a downtrend in progress on the 1-day chart. Hence, a shorting opportunity could present itself near the $70 mark but hasn’t materialized yet.
The metrics showed LTC was undervalued and saw an accumulationThe mean coin age of LTC has been climbing higher since late June. Even after the recent losses in the price, this metric continued to climb higher. The MVRV ratio was deeply negative to show an undervalued coin.
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The age-consumed metric did not see a noticeable spike after 18 August, which showed another wave of intense selling did not occur. Overall, the metrics showed that sellers could be exhausted temporarily and LTC could register some gains. The findings from the price chart showed traders can be bearishly biased in the coming weeks.