Litecoin (LTC) price fell below critical support but recovered shortly thereafter. While short / medium term rallies are expected, it looks like the price has started a downtrend.
Take back support
Litecoin’s price has been down since August 17, when the price was trading at $ 68.94. The price hit a low of $ 41.66 on September 21.
Major areas of support and resistance are found at $ 48 and $ 64, with minor resistance at $ 54.
Though it initially fell below the $ 48 support zone, it continued to move up and regained it. As long as the price is held above $ 48 it will continue to go up to $ 54 and possibly $ 63.
Technical indicators on the daily timeframe are bullish, providing support for this proposed rally.
MACD is rising and in the positive territory. RSI is rising and above 50. The Stochastic RSI has generated a bulish cross and is moving up.
Hence, the price will rise to the $ 54 level and possibly higher. Lower timeframes need to be looked at to determine exactly how the price will rise to these levels.
Try to overcome resistance
The 6-hour chart shows the price is attempting to break through the minor resistance at $ 51, above which it has not been traded since September 5. This is the third attempt.
However, the MACD is declining and the RSI has formed a bearish divergence. This shows that a drop to the $ 48 level is probable before the price is likely to move up.
Besides horizontal resistance and support levels, there is no clear trading structure or pattern.
LTC wave count
Trader TheEWguy has outlined the LTC chart, which shows a long-term decline that could bring prices down to $ 9.
In Bitcoin Magazine’s September 18 LTC analysis, we stated that:
“If this is the exact number of waves, the current movement will be sub wave 4 (black), then the price will drop again.”
Indeed, the price fell once again, reaching a low of $ 41.66 on September 21 and completing wave 5 (shown in blue below). While it seems too early to target $ 9, it looks like the price has started a bearish impulse after the August 17 highs (marked in red).
Before doing so, it appears that LTC has completed its A-B-C (black) correction, hinting at the possible initiation of a bearish momentum.
If true, the price has already started an A-B-C correction (in blue), which will end near the small resistance zone mentioned above of 54.
The $ 54 zone coincides with both the 0.5 Fib retracement level of the entire down move and the 1.61 Fib level of wave A. After that, the drop appears to be the most likely scenario.
While the LTC price is expected to rise to $ 54 and possibly a bit higher, it’s likely that the long-term trend is down.