LTC/USD Technical Analysis - 17th Feb 2014

Litecoin has been doing some interesting moves this morning and afternoon. Very interesting.

Lets take a look at the hourly chart below (click to expand).

We can see how price adhered to technicals here pretty much on every important reference point. I performed the Fibonacci study between the major swing low at 12.8 and the major swing high at 17.2. Now, it becomes very apparent how at EVERY major Fib retracement level, price reacted, almost to the pip, on multiple occassions.

Firstly, if you look at the recent low at 14.5 (marked with a blue arrow), you'll see that around that point, price was just touching the lower Bollinger line, Stochastics were underbought and heading up and the AC was green, and most importantly, price was touching the 61.8% Fib retracement level. Naturally AO followed suit on the next candle, because price rose significantly, much more than the ATR of 14.

We then saw price increase to the 38.2% Fib at 15.5 before consolidating for a few hours around the middle bollinger line, and then rising again until the 23.6% Fib level at 16.17.

Now at this point, it's clear that the 23.6% Fib level is a strong level of resistance, because look at how many times it's been tested. Four in total (highlighted in green). I doubt that this will be broken today, because of a number of factors.

Firstly, price is very high in relation to the upper Bollinger line, secondly, Stochastics have just crossed down whilst being undersold, and thirdly, the Accelerator Oscillator has turned red.

Hence, I expect price to come down and hit the 38.2% Fib level at 15.5 later today. If that happens to be below the middle Bollinger line when it occurs, then an even further retracement could occur, perhaps to the 50% level.

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