Litecoin Update: Good Time to Accumulate
The 2018 bear market has devalued many altcoins by over 70%. Litecoin (LTC/BTC) is part of that list. From the 2018 high of 0.025, the market dropped by as much as 71.78% as of November 19 when it touched a low of 0.007055. At that point, it looked like the market has more room to plummet. However, Litecoin bounced and that gave us a very good reason to start scaling in.
In this article, we explain why it’s a good time to accumulate Litecoin.
Bears Showing Signs of Weakness
If you look at the weekly chart, one thing that stands out is how Litecoin breached weekly support areas like a hot knife slicing through butter. 0.015, 0.013, and 0.0112 have been instrumental in Litecoin’s parabolic run but they did not matter during the downtrend. In the last few months, bears took out these levels with ease.
Weekly chart of LTC/BTC
The swift breach of key support levels and immediate support to resistance flip (S/R flip) appeared to be a trend. However, this changed when Litecoin touched key monthly support of 0.0086. While bears eventually cracked this level, they did so at a significant cost.
The breach of 0.0086 monthly support pushed the weekly RSI into oversold territory. On top of that, we can see a bullish divergence forming on the weekly RSI as well. These signals tell us that bears are losing steam and bulls are looking to pounce.
Market Bounced at the Parabolic Support
Losing 0.0086 monthly support to the bears drove Litecoin to the 2018 low of 0.007055. However, the leg down was met by fierce opposition from bulls.
Bears had multiple attempts to take out parabolic support of 0.0074 but bulls held their ground. As a result, Litecoin generated three hammer candles on the daily chart. This indicated that participants are constantly buying the dip and won’t allow prices to fall any further.
Daily chart of LTC/BTC
The rejection of lower prices inspired a rally to 0.008398 on November 28. Although the market is currently correcting from the surge, we believe this bounce has confirmed our bias that Litecoin is a good buy between 0.0074 and 0.0086.
Yearly Range Confirmed
With recent price action, we’ve received confirmation that Litecoin’s yearly range is between 0.0074 – 0.02275 with the midpoint at 0.015. If we’re going to follow the simple trading adage of “buy low and sell high”, then now would be the best time to buy low and accumulate Litecoins.
Yearly range of LTC/BTC
With a well-defined range, buying at current levels has the potential to yield over 220% return of your investments. Of course, there’s no guarantee, but the risk to reward ratio seems promising.
Accumulating Litecoins between 0.0074 and 0.0086 has the potential to give you significant returns. Bearish exhaustion plus bullish rejection of prices below parabolic support confirm our bias that 0.0074 is the bottom end of the yearly range. With these insights, there is greater confidence to execute the simple trading technique of buying low and selling high.
Featured image courtesy of Shutterstock.