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 recommend that LTC could wipe out most of those features within the coming months.
LTC worth paints big bear flag
Litecoin stands to pare its features primarily as a consequence of 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 powerful downtrend. It resolves after the worth breaks under its decrease trendline with an increase in buying and selling volumes.
Litecoin has been portray an identical 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 might 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 pretend”?
As mentioned 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 optimistic 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 continuing risk-on rally could possibly be a “head pretend.” In easy phrases, the continuing Litecoin rally, beneath the affect of its risk-on counterparts, could possibly be short-lived.
Unbiased 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 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
Nevertheless, not everyone seems to be bearish on danger property reminiscent of 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 powerful rebound transfer after testing a multiyear ascending trendline resistance contained in the $40 to $50 space, which might 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 might 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 includes danger, and readers ought to conduct their very own analysis when making a call.
