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Litecoin (LTC) has rebounded by 130% to almost $100 after bottoming out near $40.50 in June 2022. The primary reasons include broadly improving risk-on sentiment and euphoria around Litecoin’s upcoming halving in August 2023.
Nevertheless, technicals counsel that LTC could wipe out most of those good points within the coming months.
LTC worth paints big bear flag
Litecoin stands to pare its good points primarily attributable to a large bear flag on the weekly chart.
A “bear flag” is a bearish continuation sample that happens when the worth consolidates inside an ascending, parallel channel after present process a robust downtrend. It resolves after the worth breaks under its decrease trendline with an increase in buying and selling volumes.
Litecoin has been portray the same sample since early June 2022. Beforehand, the LTC/USD pair had undergone a 70% worth correction from $130 to $40.50. Thus, from the technical perspective, it could resume its downtrend course if its worth breaks under the decrease trendline.
As a rule, a bear flag breakdown transfer prompts the worth to fall by as a lot because the earlier downtrend’s size. Making use of the identical setup to Litecoin brings its bear flag draw back goal to almost $30.50, or 65% decrease than the present LTC worth.
Litecoin worth “head faux”?
As stated earlier, Litecoin‘s worth restoration has primarily occurred consistent with comparable strikes throughout the risk-on market due to cooling inflation.
For instance, the Nasdaq-100 stock market index has risen approximately 15.50% between October 2022 and January 2023. Similarly, Bitcoin (BTC) has rallied by greater than 50% since its November 2022’s low of round $15,500.
The weekly correlation coefficient between Litecoin and the Nasdaq-100 has been largely constructive at 0.35 on Jan. 27. Equally, the correlation between Litecoin and Bitcoin is now round 0.21.
However Mark Haefele, the chief funding officer at UBS World Wealth Administration — together with different many different analysts — has noted that the continued risk-on rally may very well be a “head faux.” In easy phrases, the continued Litecoin rally, underneath the affect of its risk-on counterparts, may very well be short-lived.
Impartial market analyst Capo of Crypto additionally agrees, noting:
“The way in which the upward motion is going on, the best way [higher-timeframe] resistances are being examined… it clearly appears manipulated, no actual demand. As soon as once more, the most important bull entice I’ve ever seen.”
Bullish situation for Litecoin
Nevertheless, not everyone seems to be bearish on danger belongings corresponding to Litecoin. Well-liked market analyst Rekt Capital sees Litecoin rallying towards $160 within the coming weeks, citing a month-to-month chart setup as proven under.
Notably, the chart exhibits LTC‘s worth present process a robust rebound transfer after testing a multiyear ascending trendline resistance contained in the $40 to $50 space, which may qualify it for an extra uptrend towards the $120–$160 vary.
These upside targets have beforehand acted as helps and resistances. Breaking this key resistance may subsequently invalidate the bear flag setup, which occurs 54% of all time, in line with research by veteran investor Tom Bulkowski.
This text doesn’t comprise funding recommendation or suggestions. Each funding and buying and selling transfer entails danger, and readers ought to conduct their very own analysis when making a call.
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