Over $300? Pullback Likely for Surging Litecoin
New users are crowding into the litecoin market, driving up one of the market's oldest and most accessible assets.
There's no stopping the litecoin (LTC) freight train.
Fuelled by trading on Coinbase's GDAX exchange, one of the most trafficked onramps for new buyers, the world's fourth-largest cryptocurrency by value is trading at an all-time high near $300, up from under $5 at the start of 2017.
With the move, the asset's year-to-date gains stand at more than 5,500 percent, three times more than bitcoin's 1,800 percent rally. Litecoin prices have also jumped close to 200 percent from the Dec. 8 low of $95.40.
The meteoric rise could be associated with the broad-based rally in the cryptocurrency space, though litecoin's accessibility to more user-friendly buying tools, and the general fear of missing out (FOMO) ongoing in developed markets, are perhaps the biggest drivers.
LTC has appreciated 75 percent in the last 24 hours. The rally is also backed by strong volumes. The 24-hour trading volume has jumped above $5 billion and the market capitalization has jumped to $15 billion.
While the broader outlook remains bullish, charts suggest potential for a minor technical pullback
On the chart above:
- Litecoin has run into the 161.8 percent Fibonacci extension level of $303.71.
- The relative strength index (RSI) shows overbought conditions. Also, a bearish price-RSI divergence would be confirmed if the current 4-hour closes in the red.
- The stochastic also shows overbought conditions.
- The 10-day MA is curled up in favor of the bulls.
- Litecoin looks set to extend the gains. The next big resistance is seen at $407.70 (261.8 percent Fibonacci extension).
- A technical pullback could gather pace if prices move below $285 (current 4-hour candle low). Such a move would open doors for a quick drop to $239.60 (red doji candle low).
- Only a close (as per UTC) below $239.60 would signal the rally has topped out and could yield short-term consolidation.
Litecoin image via Shutterstock
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