Litecoin (LTC) has rebounded by 130% to virtually $100 after bottoming out close to $40.50 in June 2022. The first causes embrace broadly bettering risk-on sentiment and euphoria round Litecoin’s upcoming halving in August 2023.
Nonetheless, technicals recommend that LTC could wipe out most of those good points within the coming months.
LTC worth paints large bear flag
Litecoin stands to pare its good points primarily as a result of an enormous 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 beneath 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 will resume its downtrend course if its worth breaks beneath 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 just about $30.50, or 65% decrease than the present LTC worth.
Litecoin worth “head faux”?
As stated earlier, Litecoin‘s worth restoration has primarily occurred according to related strikes throughout the risk-on market as a result of cooling inflation.
As an illustration, the Nasdaq-100 inventory market index has risen roughly 15.50% between October 2022 and January 2023. Equally, 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 principally 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 International Wealth Administration — together with different many different analysts — has famous that the continued risk-on rally might be a “head faux.” In easy phrases, the continued Litecoin rally, beneath the affect of its risk-on counterparts, might be short-lived.
Impartial market analyst Capo of Crypto additionally agrees, noting:
“The best way the upward motion is occurring, the way in which [higher-timeframe] resistances are being examined… it clearly appears to be like manipulated, no actual demand. As soon as once more, the most important bull entice I’ve ever seen.”
Bullish situation for Litecoin
Nonetheless, not everyone seems to be bearish on threat property similar to Litecoin. Widespread market analyst Rekt Capital sees Litecoin rallying towards $160 within the coming weeks, citing a month-to-month chart setup as proven beneath.
Notably, the chart reveals 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 additional 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, based on analysis by veteran investor Tom Bulkowski.
This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a choice.