Litecoin Surges 9.3% (7/12); Watch out for Sellers on the Rally

Litecoin Surges 9.3% (7/12); Watch out for Sellers on the Rally

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YesOption

In July LTCUSD found a price bottom just above 6.60. After the price bottom, we saw Litecoin drift higher, but consolidated under 8.00 to end the conventional trading week. After the week ended, LTCUSD surged about 9.3% during the 7/12 Saturday session.

LTCUSD 7/12 4H Chart
litecoin 7/12

(click to enlarge)

As price rallies in the near-term, look out for sellers on the rally. The daily chart shows that the 2014 price action has been bearish. Or you can argue it is a sideways market with a wide range, or heightened volatility. Both scenarios suggest there should be sellers on the rally.  If the RSI in the 4H chart starts to show bearish divergence with price, get ready for a bearish attempt.

LTCUSD 7/12 Daily Chart
ltcusd 07122014 daily chart
(click to enlarge)

Looking at the daily chart again, you can see that price fell since Nov. 2013 from around 48.00, to just above 2.00. You can see a projected falling trendline that would likely challenge the current rally if price gets to the 10.00-11.00 area. Note that the 200-Day simple moving average resides in this area, giving it additional reason to believe we should look for sellers here especially if the 4H RSI shows bearish divergence with price.

If the sell on a rally scenario does materialize, we should see price push back toward the 2.2 area. Note that ltcusd has been around this area throughout the second half of 2013 before the end-of-year firestorm that pushed it to 48.00.

If price does get back near 2.2, traders could be considering a buy-and-hold approach since the chart showed this to be a price bottom in 2013.

Next week, let’s see how the market reacts if price does get into that 10 -11.00 area. If LTCUSD does not find resistance, pops 11.00 and starts to stay north of 10.00, we might have put in a price bottom for 2014. In this scenario, price might be running away from the buy and hold approach and traders will likely have to buy on the dip to around 10, instead of to around 2.2, or even 3.

Previous Post by Author: EUR/GBP – Clues that the Consolidation is Over (7/11)

About Fan Yang

Fan Yang has been a forex trader since 2007. He attained his Chartered Market Technician (CMT) designation in 2010 and continues to trade and serve the Forex community by sharing his market outlooks.
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