The price of Litecoin has jumped very hard after the positive news of Litecoin Lightning Network reaching the 100 active node milestone. Considered digital silver to digital gold that is Bitcoin, Litecoin has seen free fall in price throughout 2018, and now it looks there is an ongoing relief for the bulls.
Breaking down the fractals, we can expect the price to find some correction and hit the one or more support levels at 0.0093 BTC (Support 1), 0.009 BTC (Support 2) and 0.0086 BTC (Support 3).
On the resistance side, the important price levels are 0.01 BTC (Resistance 1), 0.0107 BTC (Resistance 2) and 0.012 BTC (Resistance 3). If the price breaks below 0.0081, the trend will be completely invalidated and the current price action will be proven as a dead cat.
One of the confirmations of the ongoing bullish trend is that the price of Litecoin has easily gone above the 100 and 200-day Simple Moving Averages on the 1 Day time period. While the price of Litecoin faced resistance on the 100 day SMA, it faced no resistance at 200 day SMA, which showed the strength of the bulls.
The sharp rise in indicators such as volume and accumulation/distribution index on the 4-hour time frame has also indicated the validity of the current bullish price action.
Fibonacci Retracement ratios calculated from the all-time high price of Litecoin in January give us the 0.236 retracement at 0.011 BTC. This is the price which will prove to be a big resistance as bears will fight very hard at this level. For bulls to gain control of the long-term trend, the price must get and stay above this price level.
In the previous chart, we looked at the Fibonacci retracement ratios from the all-time high. Now, looking at Fibonacci extension ratios for the current bullish trend of Litecoin, we have calculated the medium term targets at 0.01075 (1.27 Fib extension) and 0.0118 (1.618 Fib extension).
Verdict: Cautiously Bullish
Comment: The price has recently gone parabolic and traders should expect some healthy retracement in the short term. Traders can look to build long positions around the support levels discussed above.
Stop loss must be in place around 0.008 BTC as the trend will become invalidated at that level. The suggestion is only valid for swing/medium term traders, not day-traders.
Disclaimer by the Author:
This is not investment advice or promotion to ICO or Cryptocurrencies or any other investment in any form. These views are based on Author’s own research and readers must execute caution & suggested to do their own research during any investments.