Is LTC/USD about to break out to the upside?
Litecoin (LTC), a Layer 1 cryptocurrency, is experiencing a surge in big-money movements. According to IntoTheBlock, about $2.85 billion worth of litecoin is being transferred daily in large amounts (transactions over $100,000). This is more than half of litecoin’s total market cap.
This high level of large transactions suggests that people or groups with a lot of money, often called “whales” in the crypto world, are very active in buying and selling litecoin.
Compared to other similar cryptocurrencies, litecoin (LTC) is performing exceptionally well in this area. For example, Dogecoin (DOGE), which is worth about three times as much as litecoin overall, only sees about $590 million in large transactions.
So LTC does 5.7x more large transactions than DOGE, but has one-third the market cap of DOGE?
This data shows that litecoin is attracting more interest from whales than many of its competitors, even some that are considered more valuable overall.
New to crypto? Check out our School of Crypto!. This course will provide you with an accessible introduction to the underlying technology and concepts behind bitcoin and other cryptocurrencies.
The fundamentals support a bull case for litecoin but what about the technicals?
Welcome to TA of the Day (TAOTD)!
Here’s the 4-hour chart:
LTC/USD 4-Hour Chart by TradingView
Technical Analysis of LTC/USD 4-Hour Chart
Using technical analysis concepts covered in our forex course, let’s analyze LTC/USD.
MA Ribbon (10, 50, 100, 200):
- 10 SMA: Positioned around 67.51. The price is above this level, indicating short-term bullish momentum. The slope is upward, reinforcing the short-term trend.
- 50 SMA: Positioned around 68.93. The price is also above this level, reinforcing the bullish sentiment. The slope is upward, supporting a continuation of the uptrend.
- 100 SMA: Positioned around 71.81. The price is slightly below this level, indicating it as immediate resistance. The slope is downward, suggesting medium-term consolidation.
- 200 SMA: Positioned around 74.00. The price is below this level, indicating longer-term bearish momentum. The slope is downward, suggesting sustained long-term bearishness.
If you’re new to moving averages and MA ribbons, read our School of Pipsology lessons on moving averages and moving average ribbons.
Williams %R (14)
- Williams %R: The current reading is -17.49, indicating that the market is in the overbought territory. This suggests that the price might face resistance soon and could be due for a pullback.
If you’re new to Williams %R, read our School of Pipsology lessons on how to use Williams %R.
Key Observations
Price Action:
- Uptrend: The price has been moving upwards after a significant drop, showing a series of higher highs and higher lows.
- Resistance: There is noticeable resistance around the 72.00 level, where the price has struggled to break through.
- Support: Near-term support is identified around the 70.00 level, providing a base for the price action.
Immediate Support and Resistance Levels:
- Support: Immediate support is around 70.00, which aligns with the recent swing low.
- Resistance: Immediate resistance is around 72.00, which aligns with the recent swing high and the 100-period SMA.
Market Structure:
- Recent Swing Lows and Highs: The chart shows a swing low on July 4th around 56.76, followed by a series of higher highs and higher lows up to the present.
- Higher Low: A notable bullish behavior was observed when the price failed to make new lower lows on July 7th and started making higher lows, indicating a potential exhaustion of selling pressure.
- Break of Structure (BoS): There was a break of structure above the previous resistance at 67.00 around July 10th, indicating a continuation of the uptrend that started from the swing low and was confirmed after the creation of the higher low.
Potential Trade Scenarios
The following trade scenarios are provided solely for educational purposes. Since they don’t include full risk management practices, they are not intended to serve as actual trade recommendations, but merely food for thought to help you generate your own trade idea.
Long Bias:
- Consideration Point: Consider entering a long position if the price finds support near 70.00 and shows signs of a bounce, such as a bullish candlestick pattern. Additionally, a break above the resistance level at 72.00 with strong volume could indicate a continuation of the uptrend.
- Invalidation Point: Consider a stop-loss below the support level of around 69.00 to manage risk.
- Potential Target: Look for a move towards 74.00. If the uptrend continues, look for a rally towards 100.00
Short Bias:
- Consideration Point: Consider entering a short position if the price fails to break above the resistance level at 72.00 and shows signs of bearish momentum, such as a strong bearish candlestick pattern or the Williams %R moving out of the overbought territory.
- Invalidation Point: Consider a stop-loss above the recent high at 72.50 to manage risk. This level is crucial as a break above it would invalidate the bearish setup.
- Potential Target: Initial target could be the support level around 70.00. If bearish momentum continues, look for further downside towards 68.00 or lower.
TAOTD Summary
- Trend: The trend appears to be bullish with a series of higher highs and higher lows, but the current overbought condition suggests a potential for a pullback.
- Key Levels: Support at 70.00 and resistance at 72.00.
- Momentum: Overbought conditions indicated by the Williams %R suggest a potential for a price pullback, but if the price breaks above resistance, further upside is possible.
- Market Structure: The recent break of structure and higher low indicates a bullish shift in sentiment. Monitoring these levels is crucial for determining future price action.
- Moving Averages Analysis: Upward slopes on the 10 and 50 SMAs indicate short-term bullish momentum, while the downward slope on the 100 and 200 SMAs suggests medium to long-term bearishness.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.