LTC/BTC Technical Analysis – 3rd March 2014

Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies. Litecoin vs Bitcoin had been dropping steadily

Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.

Litecoin vs Bitcoin had been dropping steadily like a leaf over the past week or so, but since the past twenty-four hours, it’s been dropping like a rock.

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Let’s take a closer look at the hourly chart on LTC/BTC (click to expand):

ltcbtch1_03_03_2014

I’ve done the Fibonacci study from the high of the past fortnight at 0.026, until today’s low at 0.021.

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From the 25th of February, until yesterday afternoon, look at how steady and smooth the bears were, as indicated by the long orange arrow I’ve drawn. But zoom in closer, and we’ll realise that actually, in the few hours preceding the rapid drop, there was a Bollinger squeeze in play, as shown in the white ellipse below:

ltcbtch1_squeeze_03_03_2014

We know that after such a squeeze, an expansion will come, and that’s exactly what happened. In the first chart above, I’ve drawn two red arrows, one following price and one following the Awesome Oscillator. I’ve done this to demonstrate how the Awesome Oscillator provides a key metric in reference to price action. Because if you look at the orange arrow I drew, the AO is full of interruptions of green bars implying minor retracements. However, there is no such interruption on the AO for the past 24 hours.

However, some bullish technicals told us a bigger retrace could be on the way after the sudden drop. The Stochastics were overbought and had crossed upwards, whilst the Accelerator Oscillator had turned green around the same time. Soon after, the Awesome Oscillator also followed suit, and it is of no surprise then, that price hit the 38.2% Fibonacci retracement level at 0.0232, circled in blue. It probably would have gone even further to 50% had the trend not been so strong.

In fact, already, due to the strength of the bears, these very indicators we’ve just mentioned have all turned in the opposite direction once again, and as a result, I expect price to continue falling for the next few hours until it touches the lower Bollinger Band, at which point we can expect another retrace.

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