Technical Analysis and Market Entry: Litecoin Bears Break Out of Flag Pattern
- The Litecoin price is firmly within the control of the sellers, as the psychological $50 is broken down.
- LTC/USD has broken out to the downside from a bearish flag structure, inviting a fresh wave of pressure.
LTC/USD: Recent Price Behaviour
The Litecoin price is largely in the control of the market bears, as the price drops to its lowest level in nine months. A big wave of selling pressure kicked in after critical support was broken at $60. The move to the downside was even strong enough to take out the psychological $50 price mark. LTC/USD is running towards its fifth consecutive session in the red, of which it has lost some 26%.
LTC/USD price action between 25 September up until 17 November, was moving within consolidation mode. During this period, the price formed a bearish flag structure, which was subject to a breach by the sellers. A breakout did come into play on 18 November; the bears produced a daily closure below. As a result, straight selling has been observed, as earlier with the consecutive run of losses at present.
Weekly Chart View
The price via the weekly chart view is running towards is second consecutive week in the red. As mentioned above, Litecoin has been forced to trade back down at the lowest levels since February. LTC/USD has moved deep within a critical area of demand, which runs from $53 down to $42.50. It had not traded below this zone since 19 November 2018, when the price was stuck within a stubborn bear market. A failure to hold could see the 2018 bottom area retested.
Given the huge drop in price action already, within such a short space of time, there may be room for a small pullback. A squeeze back to the upside would make sense technically, ahead of further potential moves to the south. LTC/USD is within a chunky area known for buyers, a retest of the breached flag structure is eyed. Typically, going by the technical textbook, a breakout and retest of a flag pattern, should open doors to greater selling.
In terms of trade ideas, the first ideal entry point would be on a retest of the flag at $58.80. Upon a rejection via the daily, this would mark a confirmation for shorts. Targets would be; $42.50, $40.00 and then $33.00. Stops would be placed just above the lower acting trend line at $65.00. Furthermore, another entry possibility would be on the break and retest of the described zone at $42.00. Lastly, targets would remain the same, with stops placed at $54.50.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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