The key to Litecoin’s price resuming its ascent is…
Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
While Litecoin has seen two major breakouts since August, a horizontal channel continues to be relevant on its chart. To reclaim its movement within this pattern, a few criteria need to be met first.
For one, an immediate close above $163 would be crucial for a bullish outcome. From there, a close above $174 would allow bulls to overtake market control.
At the time of writing, LTC was trading at $154, down by 3.4% over the last 24 hours.
Litecoin Daily Chart
Since early August, Litecoin has traded within the confines of a horizontal channel with two key breakouts. The first breakout inspired a rally to a local high of $233, but a broader market sell-off saw an immediate U-turn on the charts.
The second breakout saw LTC decline in value and shift to a near 2-month low of $144. To enable another recovery back into the channel, LTC needs to close above its first major resistance at $163. From there, a move above the lower trendline would push the price all the way up to the mid-point of the channel at $185.
However, this outlook would only hold up if LTC sees an immediate throwback over the next 48 hours. If the price fails to close above $163, some stabilization can be expected with $144 and $130 functioning as support lines.
For short-sellers, a close below $123.4 would offer interesting opportunities. However, some positions can be taken below $144 as well.
Since LTC’s RSI was in oversold territory at press time, buyers could come to the rescue. Such a reaction was also observed on 8 September after which the RSI surged all way above 60. The MACD also flashed a few positives. The index was close to a favorable crossover and a bullish double bottom formation.
However, the Awesome Oscillator was yet to take up a favorable position and traded below the half-line. In doing so, it was positioned favorably for sellers. The next peak above the half-line would provide more clarity as far as the future of a bullish resurgence is concerned.
Despite recent losses observed in LTC’s market, recovery did not seem a very far-fetched idea. Litecoin was trading above key support levels and buyers had a platform to respond to selling pressure.
A close above $163 would heighten the chances of a throwback within the pattern and allow LTC to maintain its bullish structure. If the $163-resistance denies a breakout, LTC’s horizontal channel would likely be negated. Fresher lows can be expected from that point.