Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
Over the past 24 hours, we are seeing a compression of price on Litecoin vs Bitcoin, after the quick hike we discussed earlier this week.
Take a look at the current LTC/BTC Hourly chart below (click to expand):
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I’ve done the Fibonacci study from the low of this year at 0.0207 to the high of this month at 0.0275, on the 4th of March. What’s interesting regarding the candle that closed at 2pm GMT on the 4th, is the colour of the Accelerator Oscillator, namely red, indicating deceleration, further strengthened by three more facts. Firstly, that very candle had a small body whilst both it’s upper and lower wicks were relatively long, secondly, the candle closed above the upper Bollinger line, and thirdly, Stochastics were approaching overbought territory.
Thus, price started falling, and within the next few candles, the Stochastics had crossed down and the Awesome Oscillator had turned red. Eventually price fell further, and this time, as soon as it hit the lower Bollinger band at 0.0245, it signified the start of the compression.
As mentioned at the very top, the last 24 hours have been particularly tight, as the Bollinger Bands are really squeezing movement, as shown in the white rectangular box, with it’s channel being formed via the 23.6% Fib line at 0.026 and the 38.2% Fib level at 0.025.
I expect price to continue the squeeze for the rest of the day.