Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice
Litecoin (LTC)’s previous rally saw notable gains stopping at the $280 level. This level was near the 61.8% Fibonacci resistance. Since then, LTC has retreated into a falling wedge (yellow) on the daily chart for the past 12 weeks.
Now, the falling wedge breakout candle needed a convincing close above its trendline resistance (white) or 50 SMA to confirm a possible recovery towards the $145 mark. On the other hand, any drop below the white trendline would confirm a hidden bearish divergence on the daily chart.
At the time of writing, LTC was trading at $129.76, up 3.58% in the past 24 hours.
Litecoin Daily Chart
Buyers entered the 13-month support near $106. For example, the altcoin registered an ROI of more than 33% in just the last 16 days from its 13-month low on Jan. 22. LTC’s bulls quickly took advantage of the general perception to initiate a breakout candlestick on Feb. 7 from its long-term falling wedge.
While trying to make up for its previous selling loss, it found a close above its 20 SMA (red). However, it becomes crucial to observe the gap between the 20 SMA and 50 SMA that have not improved in the past 18 days. This reading suggested that the bulls had not yet taken on a strong influence.
The $133 level is going to be very important for the buyers to win back before they are able to quickly test the $145 resistance. The $133 level also coincided with the trendline resistance (white) and the 50 SMA.
The RSI quickly recovered and found a close above equilibrium. However, it showed slowing signs of its trendline resistance (white). Any reversal from this level would form a bearish divergence with the price and thus would reduce the chances of a sustained breakout. A close above this line would present a strong recovery opportunity.
In addition, the Squeeze Momentum Indicator is now flashing black dots, indicating a phase of low volatility. So the bulls need to accelerate their momentum by ramping up volumes to make this breakout profitable.
The bulls should watch for a close above the USD 133 level before taking a possible retest of the USD 145 mark. While LTC shares a 92% 30-day correlation with the king’s coin, close monitoring of Bitcoin’s movement would be imperative not to call based solely on the alt’s standalone technicalities.
This post Litecoin’s crossing of this level may determine when it enters the recovery phase
was published first on https://ambcrypto.com/litecoins-breach-of-this-level-might-dictate-when-it-enters-recovery-phase/