Analysis provided by Ashton Fraser, learn more about his trading strategies with the Forex Reversal indicator.
We saw a powerful reversal pattern on Litecoin on the four hour chart. However that reversal will soon come to a halt with an important Fib line around the corner.
Let’s take a closer look at the LTC/USD H4 chart below:
I’ve performed the Fibonacci study from the low of March on the 3rd of March 2014 at 12.22, until the high of March on the 4th at 18.76.
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We can see immediately that price is now hovering between the 23.65 and 38.2% Fib retracement levels.
A key reversal candle initiated the drop to 38.2%, the one circled in red. You can see how it was a bear candle, yet the whole body was entirely above the upper Bollinger band. We know that price has a general tendency to get within the bands as soon as possible, so we if seek further corroborating factors, we’ll be able to have a good indication whether this was merely a blip or a more serious retrace.
It’s important to note that the candle marked in red barely had a lower wick, another good, bearish sign. Also, within the next couple of candles, the Accelerator Oscillator turned red, and soon enough, the Stochastics were pointing down, far above oversold territory, along with the Awesome Oscillator following suit.
Even now, we have mild bearish signs, so I expect price to drop until 38.2% (which it is already very adjacent to), before another bounce. However, breaking 38.2% today seems unlikely.
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