Litecoin prices are on pace to post the largest single-day rally since the December record high with the advance breaking above the February opening-range. The rally is now testing near-term downtrend resistance and a breach here would be needed to validate a reversal of the multi-month downtrend.
Litecoin Daily Price Chart (Log)
Technical Outlook: Litecoin prices broke above the February opening range highs & monthly open resistance today with the rally now testing the upper median-line parallel of the descending pitchfork extending off the record highs. This threshold is backed closely by a Fibonacci confluence at 222/25 – a close above this level is needed to validate a breakout of the broader descending formation with such a scenario targeting 260 and the 61.08% retracement at 298 .
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Litecoin 240min Price Chart (Log)
Notes: A cl oser look at Litecoin price action sees the cryptocurrency surging through the monthly highs with the advance now struggling at the upper median-line parallel. The technical outlook remains constructive while above the monthly open at 162 with a breach above 225 needed to fuel the next leg higher.
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Near-term bullish invalidation now raised to the yearly low-day close at 130 – a break below this level would risk significant losses for Litecoin prices with such a scenario targeting a drop towards confluence support at 116 where the 200-day moving average converges on the 78.6% retracement and basic slope support. Bottom line: prices are testing downtrend resistance and we’re looking for a reaction. From a trading standpoint, I’ll favor longs while above the monthly open.
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LTC/USD IG Client Sentiment
- A summary of IG Client Sentiment shows traders are net-long LTC/USD- the ratio stands at +6.06 (85.8% of traders are long) – bearish reading
- T raders have remained net-long since Dec 25 th ; price has moved 19.6% lower since then
- The percentage of traders net-lo ng is now its lowest since Feb 7 th when Litecoin traded near 136.42
- Long positions are 4.8% lower than yesterday and 1.7% lower from last week
- Short positions are 18.6% higher than yesterday and 43.8% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Litecoin prices may continue to fall. However, traders are less net-long than yeste rday and compared with last week and the r ecent changes in sentiment warn that the current Litecoin price trend may soon reverse higher despite t he fact traders remain net-long.
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– Written by Michael Boutros, Currency Strategist with DailyFX
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