Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
The end of Litecoin’s squeeze over the past couple of days is inevitable.
Taking a closer look at the hourly chart on LTC/USD, we can see how even though there’s been a seemingly random choppiness since the 26th of February, there is actually some method to the madness. Click on chart below to expand:
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Look at how tight the Bollinger Bands have become in recent hours, primarily fuelled by the strong resistance at the 23.6% Fibonacci retracement, where price kept on coming back to (13.9).
But you’ll see that the Awesome Oscillator and the Accelerator Oscillator have been red for some candles now, and even though the H1 chart tells us that the Stochastics are oversold, it doesn’t really matter, because there’s some large resistance if we check out the H4 chart below.
This often is enough to tell us which way the squeeze is going to expand, and it’s obvious here price is headed south.
I’ve done the Fibonacci study on the H1 chart above, so we can see that actually, the 38.2% Fib level is very close, hence I’d expect price to touch that level later this afternoon, before retracing a few pips, and then pushing again down till the 50% level by the weekend, at around 12.8.