As mentioned earlier today, there’s been some pretty bad press concerning crypto currencies, Bitcoin in particular; news – which has unsurprisingly affected other coins, including Litecoin.
However, savvy (although not necessarily wise) speculators would have seen a temporary opportunity to do something pretty crazy – performing a quick trade against these bears, because believe it or not, sound technicals gave a strong indication of such a possibility.
Let’s take a closer look at the LTC/USD intraday M30 chart below (click to expand):
I’ve performed the Fibonacci study from the swing high at just above 16.5 to the current low at 13.65.
Tales from TIOmarkets: Not Just Another Trading CompetitionGo to article >>
Now, take a look at the candle in the blue ellipse. This is a key candle here for our potential retrace, since, a) it was a bull candle, a rarity in such a rapid sell off, and b) it closed below the lower Bollinger band. As we know price always wants to correct itself and return to within the realms of the bands as soon as it’s able to, so the fact that it’s a bull candle and it’s closed outside of the bands, tells us there’s at the very least, some decent interest in a retrace. Also, we had the Stochastics approaching oversold levels.
The next candle is what gave it away, since during candle formation, the Accelerator Oscillator turned green, and seeing as though price by now was already close to the 23.6% Fib level, then it was of little surprise price did indeed hit 14.33. And as we can see, not only did price reach 23.6%, on the same candle it actually rose further to the next Fib ratio – 38.2%, at 14.75, virtually to the pip. This is absolutely no coincidence. The technicals were there and they’ve been adhered to, yet again.
Moving to the latest candle, price has now come back to the 23.6% Fib level, again to the pip, and again, no coincidence. 23.6% is the first major Fib level and often price stalls at this line.
However, we still could see a further rise, to re-test the 38.2% Fib line at 14.75, since we have further corroborating technicals to assist, specifically the Stochastics are now heading up, whilst the Awesome Oscillator has also joined the party turning green a couple of candles ago.
Crazy coin price action, but as often is the case, there’s adherence to the tried and trusted technicals.