Litecoin (LTC) has surged 130% to nearly $100 after bottoming out around $40.50 in June 2022. Litecoin halving is August 2023.
However, technicals suggest LTC could wipe out most of those gains in the coming months.
LTC Price Draws Giant Bear Flag
Litecoin is in a position to cap its gains, mainly due to the huge bearish flag on the weekly chart.
A “bearish flag” is a bearish continuation pattern that occurs when price stabilizes within an ascending parallel channel after going through a strong downtrend. It resolves after the trading volume increases and the price breaks below the lower trend line.
Litecoin has followed a similar pattern since early June 2022. Previously, the LTC/USD pair received a 70% price correction from $130 to $40.50. So, from a technical standpoint, the downtrend will resume once the price breaks below the lower trendline.
As a general rule, a bearish flag breakdown move will encourage the price to fall by as much as the length of the previous downtrend. Applying the same settings to Litecoin, the bearish flag’s lower target would be close to $30.50, 65% below his current LTC price.
Litecoin Price “Head Fake”?
As mentioned earlier, Litecoin’s price recovery largely followed a similar move across risk-on markets due to curbed inflation.
For example, the Nasdaq-100 stock market index gained about 15.50% between October 2022 and January 2023. Similarly, Bitcoin (BTC) has risen more than 50% from its November 2022 low of around $15,500.
The weekly correlation coefficient between Litecoin and Nasdaq-100 was nearly positive at 0.35 on Jan 27. Similarly, the correlation coefficient between Litecoin and Bitcoin is currently around 0.21.
But UBS Global Wealth Management Chief Investment Officer Mark Haefele, along with many other analysts, said: I got it The ongoing rise in risk-on could be a ‘headfake’. Simply put, the ongoing litecoin rally could be short-lived, influenced by its risk-on counterpart.
Crypto Independent Market Analyst Capo agree,caution:
“The way the upward movement is happening, the way [higher-timeframe] Tested for resistance… apparently manipulated but no real demand. “
Litecoin Bullish Scenario
However, not everyone is bearish on risky assets like Litecoin. Popular Market Analyst Rekt Capital look As you can see below, citing monthly chart settings, Litecoin will rise towards $160 in the coming weeks.
In particular, the chart shows that the LTC price is making a strong rebound move after testing several years of resistance on the uptrend line within the $40-$50 range.
These upward targets used to act as support and resistance. Therefore, breaking this key resistance can invalidate the bearish flag setup, which happens 54% of the time. research It comes from veteran investor Tom Burkowski.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.
