Litecoin could be heading towards a big manouevre in the next few months, as the asset continues to consolidate inside a huge triangle pattern that has been forming over the past 4 months, against the US dollar.
Following the latest comments from LTC’s Founder, Charlie Lee, the asset has suffered a loss today of -2.92% as Charlie announced his future plans to step away from the Litecoin project by working toward making it ‘more decentralized’.
Looking into the 3hr chart below we can see a pattern form with lower highs beginning to close against the lower base support below at $113 (0.236 fib level).
During the last bull run, we saw LTC rebound off this supporting level and retrace back up to the 0.382 fibonacci line before incurring selling pressure.
Now we can see the faster moving EMA’s 10 (yellow) and 50 (blue) beginning to diverge below the slower 200 average (red) which confirms that momentum is slowing down for LTC.
Once the price action passes below the 200 (red) EMA, we should expect further bearish activity push LTC back down to the lower base support as the asset sets itself up for a breakout.
Which way the breakout will go will be determined largely by market sentiment at the time of consolidation.
If the bulls move in on LTC after it touches back down near the $113 mark then we could expect a strong movement back toward the $200 area, as the asset retraces back to the 0.5 fib level. This would deliver a total return of 77.88% from these two points.
LTC could also be in danger of continuing a downtrend if the community’s confidence unravels further. A fall below the $113 support could trigger a series of panic sell-offs which could prove fatal for the project - with lower support levels way down around $90 and $74.
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