LTC/USD Technical Analysis – 17th March 2014

Analysis provided by Ashton Fraser, learn more about his trading strategies with the Forex Reversal Indicator. The weekend oversaw a

Analysis provided by Ashton Fraser, learn more about his trading strategies with the Forex Reversal Indicator.

The weekend oversaw a gentle price hike for Litecoin, but we could be faced some consolidation for the rest of the day.

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Let’s take a closer look at the LTC/USD chart below, on the M30 timeframe (click to expand):

ltcusdm30_17_03_2014

I’ve performed the Fibonacci study from Friday’s low at 16.4, until today’s high at 17.54.

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If we examine the candlestick circled in red, we can see how almost the entire body was above the upper Bollinger band. Now, even though the actual candle is a very bullish looking candle, with it’s lower wick longer than it’s upper wick, and the body itself taking up a large percentage of the whole stick, the fact that the WHOLE candle was contained outside of the upper band suggest that, whilst the bulls may indeed continue, a retrace is very likely. This is an exceedingly powerful price action pattern that should not be ignored.

Unsurprisingly, the following candle adhered to the unwritten laws of technical analysis, and price dropped a few pips. What’s more, the Accelerator Oscillator also turned red at the close of that candle. A hint that this is more than just a one candle retrace.

Hence, looking further at other technicals for corroboration, we can see how within the next couple of candles, the Stochastics started heading downwards from an overbought position, in addition to the Awesome Oscillator turning red.

With all these factors combined, a retrace to the 38.2% Fib level wasn’t unexpected (circled in blue). Since then, price has bounced off 38.2%, but with the Stochastics still pointing down and the Awesome holding some momentum, we could see price hit 50% later today. In fact, just above 50% we have 17.00, a psychological whole number, which may provide some support as well.

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