After an extended period of ranging on the intraday timeframes such as M30 and H1, Litecoin is on the cusp of a drop to around 10.00, if price can break below a certain support zone.
During my previous technical analysis on LTC/USD, I mentioned, “Price retraced down to 10.27, but that’s as far as it’s been able to test. I believe we are entering a period of consolidation over the next few hours, since there are conflicting technicals at work. Expect (10.27) to be tested again later today.” This duly occurred – however since then we’ve seen a rise to 10.8 yesterday, the week’s high. Since that high of 10.8, there’s been some further ranging, with price hopping back and forth between 10.7 and 10.4, as can be seen below:
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10.4 is significant, as it’s the 38.2% Fibonacci retracement level, marked in blue. Notice how it’s already been tested three times, (marked in blue), and with each test of course, comes more strength, so if price does manage to break 38.2% – I think it’s almost inevitable we’ll see a drop to just above 10, specifically 10.16, which is the 61.8% Fibonacci level, which will also be aided by corroborating technicals, such as the Stochastics crossing down from an overbought position, the Accelerator Oscillator turning red, likewise the Awesome Oscillator. If this happens, expect the Parabolic SAR dot to jump above the candles, which would give us greater confidence in the downtrend.
Conversely, we have some potentially bullish technicals on the Daily timeframe – so if the bears on H4 do execute what they’re threatening to, i.e. a drop to 61.8%, we may see a swift reversal back to this week’s high. Ultimately, I feel the technicals on the Daily, plus the psychological support of 10.0, may prevent the bears from taking long term control.