Litecoin has jumped more than 10 percent over the weekend as Bitcoin broke past a crucial resistance level. Now trading at $2.950, Litecoin hit a high of $3.066 before easing a bit.
So, will Litecoin head even higher or is this when the rebound fails? Well, it is very hard to say that right now but a clearer picture can definitely be obtained by using some technical indicators and taking cues from the expected Bitcoin price action.
Litecoin Chart Structure – The Resistance can be obtained by connecting the tops of Litecoin for the month of August and it is near $3.400. This is also the level at which the cryptocurrency earlier hit a bottom once (marked as the horizontal blue line).
Moving Averages – In the previous Litecoin price analysis Oversold, But Can Fall More, we discussed how the 9-day SMA of $2.7755 is acting as a ceiling for Litecoin. Piercing it and respecting the 200-day SMA of $2.5478 is definitely a positive but the cryptocurrency might not have it easy when it faces the 30-day SMA of $3.370.
Moving Average Convergence Divergence – MACD (value: -0.2447) has crossed the Signal Line (value: -0.3081) on the upside leading to big gains for Histogram (value: 0.0634).
Money Flow Index – The MFI has jumped from oversold levels to 34.7420.
Relative Strength Index – The RSI is now at 42.5292, a very weak strength reading.
I attribute the recent rise in Litecoin completely to Bitcoin, and therefore, I strongly believe that market participants can immensely benefit if they track Bitcoin markets as well. Bitcoin is expected to find support near $230-235, below which it may resume its downtrend.
If Litecoin rises further to touch the above-mentioned resistance, use it as an opportunity to create short positions as the longer trend is still very bearish.