Trade Recommendation: Litecoin
Our May 16, 2019 trade recommendation for Litecoin (LTC/USD) hit its target. On January 22nd, the market climbed as high as $146.95. Those who stuck to the trade plan grew their investments by over 72% in about a month.
Litecoin looks overextended in both the daily and weekly charts. However, the cryptocurrency looks strong. It appears that buyers are frontrunning each other and most of them are probably anticipating a massive rally before the Litecoin halving. Under normal circumstances, we’ll wait for a pullback but due to the halving, a long position at the breakout may be appropriate.
Technical analysis shows that LTC/USD is consolidating close to weekly resistance of $137. When an uptrending asset consolidates close to a resistance level, it is considered bullish. It shows that buyers expect prices to significantly increase and that’s why they’re eager to buy the resistance. That’s the scenario that we’re seeing in Litecoin.
One more signal that shows the strength of the cryptocurrency is how the daily candles are showing wicks below the bodies while Litecoin trades close to the resistance. Usually, you’ll see wicks above the candle’s body as an asset approaches the resistance but not in Litecoin’s case. This tells us that market participants are rejecting lower prices.
The strategy is to buy the breakout and retest of $137 as support. If bulls successfully convert $137 into support, our target is $185.
The process may take a month.
Daily Chart of Litecoin/US Dollar on Bitfinex
Summary of Strategy
Buy: Breakout and retest of $137 as support.
Disclaimer: The writer 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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