Litecoin (LTC) has witnessed a 50% decline in price since attaining its annual peak of $115 in July. Presently, it is trading above the long-standing horizontal support at $63 and has successfully breached a descending resistance trendline.
Litecoin revisits its historical low within the long-term trading range.
In the context of weekly technical analysis, Litecoin has seen a decline since July, when it reached its annual peak at $115.
This downward movement led to a significant breach of an ascending support trendline, pushing the price down to $56 in August, representing a 50% decrease from its peak.
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Following this low point, Litecoin has been trading slightly above the $63 horizontal level. Initially, it experienced a rapid bounce-back immediately after hitting this low, resulting in a candlestick with a pronounced lower wick (illustrated by a black icon). Such a pattern typically signals that buyers are taking control and resisting attempts by sellers to drive the price lower.
In September, Litecoin produced two more bullish candlesticks (depicted by green icons), notably around the $63 horizontal area, underlining its significance as a support level. However, it’s worth noting that there is a potential risk of a bearish candlestick formation emerging this week, indicating some uncertainty in the current price trend.
In addition to the possibility of a bearish candlestick forming this week, the weekly RSI (Relative Strength Index) is also indicating a bearish sentiment.
RSI serves as a crucial momentum indicator for traders to gauge whether a market is in an overbought or oversold condition, aiding in decisions to accumulate or sell an asset.
When the RSI reading surpasses 50 and the trend is upward, it signifies an advantage for the bulls. Conversely, when the RSI reading falls below 50, the opposite holds true.
Currently, the RSI sits below 50 (indicated by a red icon) and is in a declining pattern, indicating both signs of a bearish trend.
Is a breakout on the horizon for Litecoin’s price?
Analyzing the daily timeframe, the price action presents a somewhat contradictory picture.
On the bearish front, Litecoin (LTC) slipped below the $68 resistance zone following a brief deviation above it (indicated by the red circle). Such deviations are typically seen as bearish signals, suggesting that buyers couldn’t sustain the upward movement.
Conversely, on the bullish side, the altcoin successfully broke free from a descending resistance trendline on September 15. This is especially significant as the trendline had been in place for a substantial 74-day period, signifying that the prior correction phase might have concluded.
Despite the mixed price action, the daily RSI (Relative Strength Index) presents a bullish stance. Prior to the breakout, the RSI exhibited a bullish divergence (represented by the green line). A bullish divergence materializes when a surge in momentum accompanies a decline in price, often foreshadowing a reversal towards a bullish trend.
Considering the RSI’s bullish signal, there is a slightly higher likelihood of Litecoin experiencing a breakout above the $68 resistance area. In the event of this occurrence, a potential 28% surge towards the next resistance at $85 becomes the most plausible scenario.
Despite the optimistic Litecoin price forecast, a failure to breach the $68 resistance zone could lead to substantial rejection.
In such a scenario, one can anticipate a 10% decline toward the minor support level at $59.