Disclaimer: The findings of the following article attempt to analyze the emerging patterns in Litecoin’s short-term market and its impact on the price
The price of Litecoin has been marching higher every passing hour and reached a value of $74.18, at press time. The surge observed in the Bitcoin market was a driving factor for Litecoin and the remaining altcoin market. However, this push has also given rise to a bearish trend in the market, which may result in a correction of the current price.
Litecoin 1-hour chart
Source: LTC/USD on TradingView
The above hourly chart of Litecoin noted that its value had dipped under the support at $62.26, however, this was just a brief diversion. The price immediately bounced higher and surpassed the resistance at $64.61 and reached $74 without much hesitation. This price rise happened in a way to give rise to an ascending channel.
The formation of an ascending channel marked a trend reversal. The current bullish market has been painting signs of reversal and a chance to open short positions.
Reasoning
To start with the 50 moving average although was under the candlesticks, the gap was vast. This hinted at a possible correction that would bring the price of the digital asset back to normal.
Another indication was the Relative Strength Index. The RSI has remained in the overbought zone for more than a day. Even though it has dropped from the overbought zone every now and then, the position so close to the zone indicated that the asset has been overbought and a selling pressure may be upcoming. Currently, under the overbought zone, yet headed towards it, could mean a temporary buying pressure that could push LTC’s price a little higher, but will flip soon.
Positions
Entry: $74.50
Stop-loss: $75.85
Take-profit: $70.06
Risk-to-reward: ~3.26
Conclusion
The value of LTC may hit $74.50, which could be a good entry point and a fall may result in the value to reach at least $70.02. the bullishness in the market may remain despite this correction.