While external market factors will always influence the price action of assets and the crypto market, relying on the price trends could lead one to a more profitable outcome, which seems to be the case with Litecoin at the moment.
Litecoin fall further?
Analyzing price patterns has yielded an interesting observation. Litecoin has repeatedly been subject to a suspiciously similar pattern since it marked the ATH of $388 in May.
First, the altcoin has been in a consistent downtrend for over eight months now. What started out as a simple correction held the downtrend into 2022. Although an attempt had been made to break the level, LTC failed to sustain.
With the wedge narrowing, it seems that Litecoin could take a bad turn. While the critical resistance for LTC has risen above $142, the immediate resistance aligns with the upper trendline of $123. (ref. Litecoin price action and RSI pattern image)
Why $56 is an opportunity
Taking into account the Relative Strength Index (RSI), one can observe the pattern of the indicator’s movement in the bullish and bearish regions.
Since June, the RSI was first stuck in the bearish zone for more than 69 days until August 2021. After that, the coin remained mainly in the bullish zone for 105 days.
This was again followed by a further 70 days in which the indicator remained below the neutral line between December and February.
Litecoin Price Action and RSI Pattern | Source: TradingView – AMBCrypto
This is where it gets interesting. In between the bullish RSI trajectory, there was a 12 day period where the indicator fell below 50.
But ten days ago the RSI took another dip, it was 11 days below 50. So, given the likelihood of a repeating pattern, we could see Litecoin in the bearish zone for 69 days until April 27, 2022.
In addition, Litecoin fell 56.68 and 51.44% during both bearish trajectories. It can therefore be assumed that LTC would fall to $56 if it saw another 51% drop.
While price trends indicate a decline, on-chain statistics show that this can be avoided as LTC investors are not easily scared. Since approximately 84% of all LTC holders are long players, the likelihood of a loss-preventive sell-off is low.
Litecoin holder distribution | Source: Intotheblock – AMBCrypto
While new investors joined the network during the dip, the number of long-term holders also increased by 1.06 million addresses between December and February.
This shows that investors remain confident in the network despite the current circumstances. The critical support is now at $104.36, and if Litecoin falls through, $56 can be expected.
This post Data points to a good shorting opportunity in this coin, with it falling close to 50%
was published first on https://ambcrypto.com/data-points-to-a-good-shorting-opportunity-in-this-coin-ahead-of-a-near-50-drop/
