Volatility remains elevated after last week’s Bitcoin induced bullish move, but price action across the sector has fizzled out and most cryptocurrencies are under selling pressure. Litecoin has resisted giving up its gains and remains just below a short-term resistance zone which formed as buying pressure receded. The 61.8 Fibonacci Retracement Fan Resistance Level has just entered the top range of this resistance zone with the 50.0 Fibonacci Retracement Fan Support Level trading below it, but supporting LTC/USD for the time being. You can learn more about the Fibonacci Retracement Fan here.
The Force Index, a next generation technical indicator, confirms the loss in bullish momentum following the price spike in this cryptocurrency pair which formed the top range of its short-term resistance zone; it also elevating price action above its 50.0 Fibonacci Retracement Fan Resistance Level and turned it into a descending support level. After completing a breakdown below its horizontal support level which currently remains a resistance level, the Force Index stabilized and is moving towards the 0 center line as marked by the green rectangle. A sustained move into positive conditions will place bulls in charge of the LTC/USD and is expected to lead to a breakout above its short-term resistance zone.
Prior to last week’s bullish wave, LTC/USD confirmed its support zone which is located between 46.78 and 49.93 as marked by the grey rectangle; this represented a fundamentally oversold condition for this cryptocurrency pair and a price action reversal was brewing. The Bitcoin induced catalyst on the back of misunderstood comments by Chinese President Xi in regards to blockchain technology generated a bullish technical scenario which may now lead to a second breakout above its short-term resistance zone. This zone is located between 59.23 and 62.14 which is marked by the red rectangle. You can learn more about a resistance zone here.
Price action is now sandwiched above its 50.0 Fibonacci Retracement Fan Support Level and below the bottom range of its short-term resistance zone. Forex traders should monitor the Force Index as a double breakout, above its horizontal resistance level which just experienced a crossover with its descending resistance level, could provide the bullish catalyst for a double breakout in LTC/USD; above its descending 61.8 Fibonacci Retracement Fan Resistance Level and above its short-term resistance zone. This will clear the path into its next long-term resistance zone which is located between 72.30 and 75.91.
LTC/USD Technical Trading Set-Up - Breakout Scenario
Long Entry @ 58.75
Take Profit @ 73.60
Stop Loss @ 56.00
Upside Potential: 1,485 pips
Downside Risk: 275 pips
Risk/Reward Ratio: 5.40
Failure by the Force Index to push above its twin resistance level may result in a reversal which could lead to a breakdown below its ascending support level. A breakdown sequence in the LTC/USD may follow which could extend into its 46.78/49.93 support zone from where more downside is unlikely given the solid fundamental picture. Any descend into its support zone should be considered and excellent long-term buying opportunity.
LTC/USD Technical Trading Set-Up - Breakdown Scenario
Short Entry @ 53.30
Take Profit @ 48.00
Stop Loss @ 55.40
Downside Potential: 530 pips
Upside Risk: 210 pips
Risk/Reward Ratio: 2.52
