Technical Analysis and Market Entry: Litecoin Subject to a Bear Attack As Price Moves Within Flag Structure

Litecoin
  • Litecoin price has been grinding gradually to the upside since late September, following a brutal bout of selling. 
  • LTC/USD price action has formed another bearish flag structure, subject to a potential breach.

LTC/USD: Recent Price Behavior 

The Litecoin price has managed to stabilize since late September, gradually grinding to the upside. It follows the price taking such a heavy beating from late June until September. A strong bear market came into play, after such a decent rally that had started at the beginning of 2019. The most recent substantial drop was seen between 18-24 September, LTC/USD fell a massive 30%, but has managed to recover some of this. 

LTC/USD caught some support after touching the lowest levels seen since March. The zone that saved Litecoin from further free-falling was $52-42 price range. It was a critical buying area that attracted a high amount of interest in back in March. It laid the foundations for giving the bulls enough encouragement to drive north, given the tough demand zone. The most recent bounce and stabilization in late September, reconfirms buyers remain active within the region.

LTC/USD daily chart.

Bearish Flag Structure

Since the noted bounce, the price has ground higher ever so gradually. It has seen LTC/USD form an ascending channel structure, which can also be viewed as a bearish flag. Either way, the technical behaviour does make Litecoin vulnerable to downside risks. 

LTC/USD has recovered some 35%. A similar pattern formed between 29 August – 21 September, which saw the bears capitalize on. It was the trigger of the most recent fall for Litecoin.

Trade Recommendation

Should the above-described flag structure, eyes are on another breakout to the downside. The momentum to the upside from the bulls since the late September bounce has not been strong enough. The price is only just off the low area produced down within the $47 territory. It does make this area vulnerable to a retest, which could then be at risk of the low being breached.

Given the technical price formation, shorts are attractive around current market levels. The flag does increasingly look subject to a bear breach. Targets of interest are; $47, $35 and then $25. Stops to be placed just above the flag up at $66, leaving enough breathing room in case of a short-lived spike.

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.