Litecoin [LTC] bears showed their dominance again late last week, leading to more downward momentum. However, LTC’s latest lows suggest it is closer to the bottom than expected.

LTC hit a new low in 2022 on June 14 after a low of $40.32. Historical performance shows that the last low price in 2020 acted as a structural level. LTC hovered around the same price level in the second half of 2020 before rallying in October of the same year. This means that LTC’s latest decline has placed it in the same price range as one of the key support levels.

However, LTC bounced back slightly to $46.12 on June 16 after interacting with a bearish support line. Closer analysis of the latest price action shows that it is about to break out of its bearish wedge pattern now that it is inside the price squeeze zone. Although the breakout could happen in any direction.

Source: TradingView

Litecoin’s RSI reveals that it became oversold at its recent low. The slight recovery since then has been marked by some accumulation recorded by the money flow indicator. The DMI indicator also registered a sharp drop in selling pressure, as evidenced by the shift in direction in the -DI.

The +DI rose slightly, reflecting the slight accumulation, paving the way for some bullish performance. However, low volumes and uncertainty limited bounceback.

Making the bullish case for Litecoin

LTC’s oversold terms mark the first major sign of significant upside potential. The pricing model on Glassnode further reinforces the severely oversold observation. For example, the price is currently more than half below the realized price of $107. This is a sign that it is deeply oversold.

Source: Glassnode

Litecoin’s MVRV ratio had also expanded its downside to 0.42 at the time of writing. The ratio is considered oversold if it is below unity, hence another confirmation that LTC is near the bottom.

LTC’s price and on-chain stats lead to the same conclusion that it is indeed oversold and ready to be handed over to the bulls. Still, the market remains at the mercy of investor sentiments that can turn abruptly. Such a result would lead bears to extend their dominance, but not for long.

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