Litecoin’s (LTC) close this week will likely set the tone for the next major move in prices, the technical charts indicate.
The cryptocurrency saw moves both ways last week – prices hit lows and highs of $72.58 and $84.24, respectively – before closing on Sunday on a flat note at $80, signaling indecision in the market. This leaves litecoin at the mercy of the price action this week, meaning a convincing bullish move – preferably above last week’s high – could well entice bargain hunters and lead to a notable price rally.
On the other hand, if LTC finds acceptance below $72.58, then more investors will likely liquidate their holding (long positions), yielding another round of sell-off.
At press time, the world’s sixth largest cryptocurrency by market capitalization is trading at $85.00 on Kraken.
Litecoin created a doji candle last week at the key support of $79.31 (78.6 percent Fibonacci retracement of the rally from the 2015 low to 2017 high).
A doji candle normally represents indecision, however, when viewed against the backdrop of the sell-off from its record high of $369, the doji could be seen as representing bearish exhaustion.
If the cryptocurrency closes above $84.24 this week, it would confirm a bullish doji reversal (i.e. a bearish-to-bullish trend change). While this scenario may sound exciting to the bulls, they should remember that the 5-week and 10-week moving averages (MA) are still biased to the bears.
Further, the relative strength index (RSI) is in bearish territory, holding well below 50.00.
And, last but not least, the long-term outlook remains bearish while litecoin is trading below the 50-week moving average, currently at $124.70.
So, a weekly close below $72.58 (last week’s doji candle low) would signal a continuation of the sell-off from the April high of $183.00.
- A weekly close (Sunday, as per UTC)) above $84.24 would confirm a bull doji reversal and open up upside towards the 50-week MA, currently located at $124.70.
- A close below $72.58, however, would shift risk in favor of a drop to $50 (psychological support).
Litecoin image via Shutterstock