Litecoin continues to flounder
- Litecoin continues to underperform
- breaking the back of support
- continued weakness ahead
Litecoin continues to underperform
Litecoin has fallen a bit during the trading session on Wednesday, as we continue to see a lot of weakness in this particular coin. When it comes the cryptocurrency markets, Bitcoin leads the way but not all cryptocurrencies are starting to follow it. The fact that Litecoin has broken down below the support shown over the last several days, and therefore it’s very likely that we continue to go much lower.
While Bitcoin has rallied quite significantly over the last several months, you can see that Litecoin has broken down quite a bit. We are now well below the 200 day EMA, which of course is a very negative turn of events. At this point, every time Litecoin has tried to rally, the sellers have come out hand over fist.
The two major moving average of that that I follow, the 50 day EMA which is pictured in red and the 200 day EMA which is pictured in blue, are both above current pricing. This suggests that we are in a longer-term downtrend, but a simple scan from June of this year tells you that we are in a downtrend as well. The fact that we have broken down through the hammers that made up trading over the last several sessions also suggests that we are going to go lower.
At this point in time, it’s very likely that the 200 day EMA, which is currently trading at $83.40, should offer a bit of a “ceiling” in the market. Before that though, the $80 level will offer a certain amount of psychological resistance. In other words, there is still plenty of selling pressure.
The potential targets going forward is the $60 level underneath, as we have seen a shot higher from that level during the early part of April. This should be significant support, but if we were to break down below the $60 level, we would also get another target at a lower level, possibly the $40 level. Ultimately, there’s no reason to think that this market is going to suddenly turn around of less Bitcoin catches on fire to the upside.
Central banks around the world continue to look very loose with their monetary policy, and that should be helping crypto. In fact, it’s one of the main reasons why we have seen Bitcoin rally so strongly. That being said though, if Litecoin isn’t going to follow, that tells you all you need to know about this marketplace. It’s one that should be sold, as it simply isn’t performing as many other crypto markets are. It’s possible that central bank easing is only seeing a certain amount of money go into the crypto market, and quite frankly Bitcoin is sucking it all up.
The trade going forward
The trade going forward of course is to sell this market every time at rallies and show signs of exhaustion. It’s not until we get a daily close above the 200 day EMA that I would concern myself with the idea of buying.