Technical Analysis and Market Entry: Litecoin Moving Within Bearish Flag Structure, Subject to a Breach
- Litecoin’s price has attempted to stage a rebound over the last two weeks but does not look stable.
- LTC/USD price action has formed a bearish flag structure, subject to a potential breakout south.
LTC/USD: Recent Price Behavior
The Litecoin price has enjoyed a break from being under selling pressure, which had initially triggered at the back-end of June. LTC/USD struggled to find any support or safety net following such as strong start to the year. It lost much ground after hitting $146, which was the highest level since May 2018.
2019 gains were as much as 550%, after starting the year as low as $30. The run higher at the time was showing a strong resemblance to the 2017 bull run. However, this time around, LTC/USD had actual historical levels to work with. Previously, it was all very much fresh territory.
Troubling Price Consolidation
During this current bear market for LTC/USD, the price continues to go through periods of consolidation. The price behavior during this tends to form a bearish technical structure, which is subject to further downside pressure. It was observed with a pennant between 15 July-6 August. The same technical pattern formed between 18-27 August, which was again capitalized on by the sellers.
Most recently, LTC/USD has further consolidated from 30 August and is still in play at the time of writing. The price behavior has seen a bearish flag pattern formation being constructed. Support to the downside is tracking at $65, the lower acting trend line of the flag. It is in proximity to a known area of demand, which runs from $65 to $55.
The noted area of demand actually played a significant part in gathering buying momentum this year. Upside picked up pace back in April, following the price being forced to make a short-lived retreat down to this territory. LTC/USD went on a seven-week straight run of gains, jumping some 127% from the zone.
Given the above-described technical flag formation, eyes are on further downside pressure. The pattern does appear vulnerable to downside risks,following the period of consolidation. In terms of targets south, $60, $55 and then $50 in the near-term are eyed. An entry around the current market price, with stops placed just above the structure at $75, may be considered.
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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