Technical Analysis and Market Entry: LTC/USD Has Formed Another Deadly Pennant Pattern

  • The Litecoin price is back to trading within a narrow range, as the selling pressure eases for now.
  • LTC/USD recent price action has seen the formation of a bearish pennant structure, subject to a potential breakout south. 

LTC/USD: Recent Price Behaviour

LTC/USD has been moving within a very narrowing nature, as the sellers’ ease of the pressure for now. The price was under heavy selling pressure since late June, which has seen any near-term rallies continue to be sold. Between late September up to mid-November, Litecoin enjoyed a very short-lived bout of upside. However, as mentioned, these have been vulnerable to being sold, which proved again to be the case.

The price had formed an ascending channel structure, which was also viewable as a bearish flag formation. Sellers were able to capitalize on this formation, inviting another wave of downside pressure. Litecoin was forced again to give up the psychological $50 price mark and then hitting ten-month lows. It has not far off seen the gains made from the start of 2019, being given back. 

At the beginning of 2019, Litecoin was trading down at $30, before rallying to heights of $146. It had hit the highest level seen since May 2018, gaining some 400%. The bulls had failed to breakdown a chunky area of supply, running from $130-145. Since the rejection, LTC/USD had fallen a whopping 70%, with signs continuing to point to a move lower. 

LTC/USD daily chart.

Bearish Pennant 

Since the price breached the noted bearish flag structure, the price has been narrowing. As a result, the formation of a bearish pennant can be observed via the daily chart view. The construction of this pattern came into effect on 23 November, following the wave of selling late in the month. It was the worst monthly performance that had been seen since August. 

The narrow behaviour does suggest that an explosive breakout will soon be followed, as the bears look set to resume the current trend. A return to the levels seen at the start of the year could spark either another large commencing of a bull market, or cause much ‘FUD’. A breach of the critical 2018 bottom would be catastrophic for Litecoin. 

Trade Recommendation

Given the described bearish pennant pattern, sell opportunities remain somewhat attractive, with an entry around the current market price. Targets to the south eyed at; $40, $35, $30 and then $25. Stops for the trade would be placed just above the detailed structure, at $50, leaving enough breathing room in case of short-lived spikes higher. 

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.

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.