Relief Rally Ahead? Litecoin Looks Oversold Below $100

Litecoin may have hit fresh 2018 lows Wednesday, but could be in for corrective rally courtesy of oversold conditions.

The world's sixth-largest cryptocurrency fell to $93 at 15:10 UTC, the lowest level since Dec. 8, and is currently trading at at $95.80 on Bitfinex, down 9 percent in the last 24 hours.

The 48 percent drop from the May high of $182 has turned the tide in favor of the bears. However, the sell-off looks overdone as the daily relative strength index (RSI) has nosedived into oversold territory (below 30.00) for the first time in over two months.

Hence, LTC could revisit $100 (major psychological hurdle) in the short-run before resuming the drop towards $80.

Currently, the RSI is hovering at 26.00, indicating oversold conditions. So, the sell-off may run out of steam in the next 48 hours or so.

Interestingly, LTC is looking oversold at a time when short positions on Bitfinex exchange are at the highest level since Oct. 12.

Usually, such extreme market positioning is considered a sign that a trend is nearing exhaustion. So, a short squeeze could be in the offing and could lift prices above $100.00.

That said, the broader outlook would still remain bearish as indicated by a pennant breakdown in the long-duration charts below.

As of writing, LTC is trading well below the 50-day moving average (MA), 100-day MA and 200-day MA,  indicating a long-run bearish setup. Also, corrective rallies will likely be short-lived as long as the 5-day and 10-day MAs are trending south in favor of the bears.

Litecoin image via Shutterstock