Technical Analysis and Market Entry: Litecoin Moving Within Bearish Flag Structure, Subject to a Breach

Litecoin
  • 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.

LTC/USD daily chart

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. 

Trade Recommendation

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.

Featured image courtesy of Shutterstock. 

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.