LTC/USD Technical Analysis – 11th May 2014

Litecoin has been falling all day today, initiated by some really bearish technicals. How far down will today's move reach?

During my analysis on LTC/USD last week, I discussed the how price was very likely to fall during midweek, before rising back to around 10.8, mentioning, "Conversely, we have some potentially bullish technicals on the Daily timeframe, so we may see a swift reversal back to this week’s high (at 10.8)."

And that's as far as it managed to reach, the week's resistance at 10.8 obviously proving too strong. In addition, there have been a multitude of indicators giving us southern signals for a number of hours, as we can see via the current LTC/USD H4 chart below:

I've performed the Fibonacci study from the low of the month at 9.76 until the high of last week at 10.8.

Look at the cluster of candlesticks circled in white - these give us a very strong clue concerning an impending reversal. Each one of them possess upper wicks that are longer than their lower wicks. This is very significant, as it's not often you get a consecutive number of candlesticks on the larger timeframes appearing in such a manner. At the same time we had the Accelerator Oscillator and Awesome Oscillator as red. In fact, it was the 23.6% Fibonacci retracement level at 10.56 that was preventing price from breaking through, but once the Stochastics joined the party as well, with its %K crossing below the %D, it was almost inevitable price would shatter the brittle line that was 23.6%.

Subsequently, we saw price plummet, with consecutive four hour bear candlesticks, all the whilst possessing once again, longer upper wicks than their lower ones.

Right now price is hovering along the 50% mark, at 10.3 (marked in blue). Often 50% is a place for a breather, and we can see how it's already been tested on the 9th. However on this occasion, I'm not sure it can hold for long, the bears still have a lot of momentum, and probably won't care much for this support. If 50% can't hold, I'd expect a drop to at least 61.8% at 10.16 by tonight / early tomorrow.