Litecoin (LTC) is establishing itself in a stable position near a long-term support area as weekly selling pressure appears to be slowing. Historical buying has consistently occurred at current price ranges. If the price can continue to hold above this level, the next major upside would be toward the $90 price level.
Litecoin Has Started Its Next Move Up
Matthew Dixon, a well-known cryptocurrency analyst, spotted the potential for a bounce in Litecoin from its long-term support level. Dixon noted that Litecoin could be showing an early indication of a possible bounce.
Dixon added that he could potentially see a “hidden” bullish divergence forming on the weekly chart. A bull divergence forms when price action is relatively flat or trending lower while momentum is building.
Such conditions normally develop in an accumulation phase of the market, as opposed to an extended downtrend. He went on to state that he believes long-term holders are still holding their positions as volatility decreases.
Source: X
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Litecoin Remains Closely Tied To Long Term Trend Indicators
Litecoin’s price action remains very close to its 200-week exponential moving average (200 EMA). Price has historically reacted strongly to this average, thereby validating the technical significance of the average.
When the price is holding above or near the 200 EMA, it is generally seen as a sign that long-term support exists. The Litecoin price action has been finding additional support at significant Fibonacci retracement levels and the 200 EMA.
In the past, these Fibonacci retracement levels have represented long-term demand as opposed to short-term speculative selling. As such, when price action is around these levels, it is typically indicative of the market’s uncertainty as to which direction price will go next, and not a breakdown of the current trend.
EMA and Fibonacci. Source: TradingView
Litecoin’s Selling Pressure Appears To Be Waning
On the weekly chart, the MACD is showing that bearish momentum is waning. As the histogram bars are becoming smaller, it is clear that the selling pressure is not accelerating.
While a bullish crossover has not been created on the MACD, momentum appears to be weakening. The RSI also provides evidence that bears are losing momentum.
Even though Litecoin has recently shown significant weakness, the RSI is above extreme oversold levels. This means that sellers have had difficulty pushing the RSI into the extreme oversold territory.
There is even a hidden bullish divergence on the RSI, consistent with Dixon’s belief in the underlying strength of LTC. All of the momentum indicators appear to indicate that the price is stabilizing and will not continue downward.
MACD and RSI. Source: TradingView
If the support at the current levels holds, then a rebound towards the $90 price zone may become the new upside objective. That level is a past resistance level and has psychological importance. A move up to that level would represent a continued upward movement within a larger consolidation zone.
Also Read | Litecoin (LTC) Slips After Bearish Weekly Close as $71.40 Resistance Caps Recovery
