LTC/USD Technical Analysis – 30th March 2014

In less than two weeks, Litecoin has lost almost 40% of its value - can anything catch this falling knife?

As crazy as it sounds - quite possibly is the answer.

Let's take a closer look at the LTC/USD chart on the Daily timeframe (click to expand):

I've performed the Fibonacci study from the low of this year at 10.7, until the high of this month, at 21.1.

As we know there was a sharp drop from the 19th, and despite some hope at the start of this week, the bears haven't abated. For the past few days, the Awesome Oscillator and Accelerator Oscillators have been red indicated further selling, but there is a glimmer of hope.

Take a look at the candle from two days ago, in a blue ellipse. Two interesting observations here. Firstly, the candlestick in question is a spinning top candlestick, where the upper and lower wicks were almost identical in length with price closing almost where it opened. So even though the small body of the candle displays barely any movement from its opening to its closure, the relatively long upper and lower wicks tell us that both the bears and the bulls were in action during the candle formation, in this case, over a 24 hour period, since we're on the D1 timeframe. Point being, this type of price action can signify indecision. Secondly, look where its lower wick reached - the 78.6% Fib retracement level.

Indeed, as I write this analysis, Litecoin is again hovering around the 78.6% Fib level, and this, along with the fact 78.6% coincides with the price mark of 13.00, an important psychological whole number; is providing some support for the meantime. We also have the Stochastics in oversold territory, which may turn around in the next few candles.

However, that's all academic - since, if price closes below 78.6% / 13.00, then I fear we could see a re-test of the year low come April.