Technical Analysis and Market Entry: Litecoin May Be Forced to Return to $30
- Litecoin’s price is stuck within a devastating trend to the downside, dropping 50% in the last ten weeks.
- LTC/USD price action has formed another bearish pennant, subject to a breakout.
LTC/USD: Recent Price Behavior
The Litecoin price remains heavily weighted to the downside, with no signs of this changing anytime soon. LTC/USD has been within a strong bearish trend since the back-end of June, struggling to find a bottom. Any small pullbacks or periods of consolidation are opportunities for sellers, as they come in for further bloodletting.
LTC/USD has now dropped some 50% since the 23 June price of $146. There have been critical technical areas that have been breached, which assisted with the downside pressure. The price had previously been supported by an ascending trend line, which was running from late April up until 10 July. Bears forced a breach, inviting a significant wave of selling.
Mimblewimble Development in Progress
Litecoin founder Charlie Lee has finally provided the community with an update regarding Mimblewimle. Back in January, he had been teasing plans to introduce confidential transactions to the network. Lee previously tweeted:
“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy. I am now focused on making Litecoin more fungible by adding Confidential Transactions.”
Following this initial communication, nothing was heard thereafter, extending a period of silence regarding any form of development. However, hope has now been restored following the recent tweet from the Litecoin founder. Lee has introduced a new developer joining Litecoin’s privacy project. He tweeted:
“Updates on MimbleWimble progress:
@davidburkett38, the main developer of Grin++, is now working with @ecurrencyhodler and I on the design. We’ve been ironing out the mechanism of getting LTC in and out of MW/EB. Also figured out how to handle MW fees in a clean way. Asparagus!”
With Mimblewimble, Litecoin is able to enhance its scalability and fungibility.
Given the lack of signal that the bearish bias will be changing anytime soon, further downside is still eyed. A critical area of demand has recently been breached to the downside and retested, leaving the door open to further moves south. At the time of writing, LTC/USD can be seen consolidating underneath the detailed zone, having formed a bearish pennant. The lower acting trend line of support can be observed tracking at $70, and a failure to hold will likely trigger more selling.
In terms of targets to the downside, $65, $60 and $55 (a critical area of demand) are eyed. Should this fail to hold, a fast drop down to $30 could then be observed. Stops would be placed at $86.50, above the earlier noted demand that is now acting as supply.
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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