Bitcoin and Litecoin had sharp but brief rallies last week. While it initially looked like price bottom attempts, we are now seeing price in both cryptocurrencies fall back into its prevailing downtrend.
Bitcoin (BTCUSD) 1H Chart 9/28
(click to enlarge)
The 1H chart shows the rally last week breaking above the 200-, 100-, and 50-hour simple moving averages (SMAs), and pulling the 1H RSI above 80. These bullish signs however were invalidated when price fell back below the moving averages. The RSI also fell below 40 to show loss of the prevailing bullish momentum, and also fell below 30 to show bearish momentum as we wrap up the weekend.
Now price has fallen below the 379 low to a new low on the month. We might expect some pullback in the very short-term because the 1H RSI is showing oversold conditions. However, we should expect resistance in the 390-400 area, which represented support last week. The moving averages are also mostly in that area. A break above 410 might spell trouble and signal some bullish correction.
With the prevailing downtrend maintained, the bearish outlook remains toward the 2014-low at 340.
Litecoin (LTCUSD) 1H Chart 9/28
(click to enlarge)
Litecoin is showing a similar technical development to bitcoin’s in the 1H chart. We can see the rally last week that pushed price above the SMAs, and where the RSI reflected bullish momentum when it popped above 80. Just like bitcoin, these bullish signs are now invalid. However, price is still above a recent low around 3.91. With the 1H RSI showing a bullish divergence in oversold territory, we an anticipate some very short-term pullback. We should expect resistance in the 4.25-4.35 area, which is the previous support, and where the SMAs reside.
If price breaks above 4.50, we might continue to have consolidation. Otherwise, price is poised to test and the 3.91 low, and with the prevailing trend intact, it should break lower. This bearish continuation scenario would maintain pressure on the 3.33 August low, and then the 2.21 low on the year.
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