Litecoin at a crossroads
- Major Fibonacci retracement level
- Moving averages flattening out
- Now or never for Litecoin
Litecoin Continuing to Grind at Major Support
Litecoin continues to find the $70 region to be very interesting, as traders have simply sat there and waited to see whether or not we are going to break down, or bounce. There is a huge confluence of technical reasons to think that this area is going to be crucial, not least of which is the fact that it is the $70 handle. Beyond that, we also have the 61.8% Fibonacci retracement level, which is something that attracts a lot of attention as it is considered to be the “golden ratio”.
Candlestick formations over the last several days have basically been neutral or hammer-like, which is of course a bullish sign. That being said, we haven’t exactly taken off either, and we have the 200 day moving average just above. Beyond that, we have the 50 day moving average starting to reach towards the 200 day, perhaps getting ready to form a “death cross”.
Confused yet? That’s the point. It seems as if traders are simply confused at the moment because they just don’t know what to make of all of these noisy signals at the same time. Add in the fact that the US dollar has been strengthening against most currencies, crypto included, and Litecoin could be in for a bit of a rough ride.
The trade going forward
The trade going forward is going to be to simply sit on the sidelines and wait for the market to show itself and see what its desires are. For example, what we need to see is a daily impulsive candle. At this point, the odds favor some type of bounce due to the fact that we are simply sitting here. But trying to jump in front of the trade is a rather risky way to trade crypto, or any other market for that matter. Ultimately, this is a market that plays second fiddle to Bitcoin anyway, so the Bitcoin chart would be your second indicator. If Bitcoin rallies, then it gives us the all-clear to pay attention to Litecoin doing the same thing.
A lot of hardcore crypto believers are trying to differentiate between coins, but the reality is that most financial participants don’t. If Bitcoin sneezes, the rest of the world catches a cold. This is very similar to the forex markets, as the US dollar is so heavily influential on so many other currencies.
Once we get some type of longer candlestick, I’m more than willing to either buy or sell depending on which direction it breaks. Typically, when the market sits like this, big money is either being accumulated or distributed. It’s almost impossible to tell what’s happening, at least not until somebody gives way. That day should come soon, and this is a perfect area for that to happen.