Litecoin vs Bitcoin fell this morning to 0.0224, only for there to occur an intense, sharp reversal, initiated by a very rare but powerful price pattern.
Let’s take a closer look at the LTC/BTC four hour chart below (click to expand):
I’ve performed the Fibonacci study from the low at 0.0224, until the high at 0.0263
Check out that candle marked in blue – there are three properties of this candle that make it pretty unique.
1) It’s opened and closed outside the Bollinger bands.
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2) The candlestick’s range is the largest it’s been since late March.
3) It’s lower wick is exceedingly long, whilst possessing no upper wick.
The fact that it closed as a bear candle is almost irrelevant, since in every other sense, this candle is a bull candle.
Unsurprisingly, the next candle continued the bullish reversal (I say continued, because the huge lower wick of the candle marked in blue was when the trend actually began), spanning four zones of the Bollinger Bands. When I say zones, I’m referring to a) the zone below the lower Bollinger band, b) the zone between the lower and middle bands, c) the zone between the middle and upper bands, and d) the zone above the upper band. Thus, we can see how this mighty candle (marked in white) ripped through all four zones – before coming back down to the 38.2% Fib level, yet, there was a valid reason for it stopping where it did, and for that we’ll need to apply a different Fib study, as below:
In this case, it becomes clear that the 61.8% Fib retracement level at 0.0262, marked in red, is providing strong resistance. With Stochastics still heading upwards and the Accelerator and Awesome Oscillators as green, I think price could test 61.8% again, possibly today or tomorrow.