Litecoin was in a consolidation and bullish correction mode last week,
rallying from a low of 3.33 to 6.19. There was resistance around the 6.0
handle, and price retreated since than. During the 8/23 Saturday
session, price continues to slide, and has cleared the 5.0 level and the
50-period SMA in the 4H chart, bringing back the bearish outlook. The
next phase in the 4H chart would for the RSI reading to drop below 40,
which shows loss of bullish momentum from last week, and thus reduces
the prospect of a bullish market.
Litecoin 4H chart
The volume is not strong with this decline, so let’s not get ahead of
ourselves yet. It is true we should maintain a bearish outlook because
the prevailing trend is bearish, especially a break below a support
pivot at 6.66. The bearish outlook exposes the 2014-low at 2.21. While
this is still the outlook for the medium-term, we did see short-term
neutralized if not turned bullish. So, let’s first limit our bearish
outlook to the 3.33-3.40 lows from last week. We have to juggle this
conservative outlook with the very bearish outlook seen in the daily
chart.
As you can see on the daily chart, there was a spike down to 2.21 on
July 1st, and price has since been cheweing down this “tail”. The market
looks poised to do so, and threaten to push even lower back to the
common price in the 1.50-2.0 area througout 2013 before the November to
December surge.
Litecoin Daily Chart
After looking at the 4H and Daily chart, we can be neutral, bearish, or
neutral-bearish, but there should not be any consideration of a bullish
market yet, at least until price gest to 2.21, and the daily RSI back
below 30.
Also, if the 4H RSI fails to break below 40 and comes back up while
price stays north of 4.0 and climbs above 5.0, we should expect further
consolidation, bullish correction in the upcoming week.
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