Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The Bitcoin market registered an important price drop recently, one wherein the value of the digital asset dipped briefly under $30k on the charts. Although the cryptocurrency’s value later bounced back above the $30k-level, the said drop in price also contributed to major altcoins like Litecoin plunging on the charts.
Litecoin briefly breached the support at $125, following which it managed to recover from its sudden fall on the charts. At the time of writing, Litecoin was valued at $137.27, with the cryptocurrency trading close to its immediate resistance levels.
Litecoin one-hour chart
Source: LTCUSD on TradingView
From the attached chart, Litecoin’s price can be seen falling within a descending channel and hitting a low of $121.97. This low was followed by an immediate retracement as the market tried to stabilize. In fact, later, the price of the digital silver immediately pushed higher, which was why LTC was trading above $130, at press time.
Given the aforementioned drop, the digital asset may breach the resistance at $138 and be priced higher on the charts.
Reasoning
The 50 moving average moved above the price bars and acted as a resistance level for the price of LTC. The said fall pushed LTC into the oversold zone, with Bitcoin’s own depreciation on the charts contributing to growing selling pressure. However, as the price recovered, the Relative Strength Index also moved into the equilibrium zone. As this level looked like a consolidating range for LTC’s price, the emergence of bullish pressure may push it higher on the price scale.
Further, the Awesome Oscillator highlighted the momentum shifting towards the sellers’ side. The AO dipped under zero a couple of days back, and a short position of traders must have realized here as the market went on a downtrend. With the downtrend sustaining itself, all momentum in the market was lost.
Crucial levels to look out for
Entry: $138.03
Stop-Loss: $134.73
Take-Profit: $144.88
Risk-to-Reward: 2.39
Conclusion
The press time price level looked like a consolidating level for Litecoin. However, a northbound push for the digital asset may result in traders benefiting from a long position as they realize a profit at $144.88.