Litecoin (LTCUSD) 1H Chart 2/27
Litecoin entered the week falling from last week’s highs just under 1.90 down to about 1.80. It has continued to trade in a sideways consolidation wihth very low volatility and volume.
The 1H chart shows the consolidation this week and it reflects a slight bearish bias.
1) Price has held under the 200-, 100-, and 50-hour SMAs. This means price is below its average levels based on the previous 50, 100, and 200 hours or price action.
2) The RSI has held below 60 for the most part, and was able to tag 30 today. Tagging 30 represents bearish momentum and the ability to hold below 60 reflects maintenance of this bearish momentum.
These conditions suggest that litecoin is looking to test the support around 1.80 again.
Now, if price holds above 1.80 and climbs back above 1.85, it would clear the moving averages and put pressure on the 1.88-1.90 highs. But what happens if price falls below 1.78? Let’s take a look at the 4H chart.
Litecoin (LTCUSD) 4H Chart 2/27
(click to enlarge)
The 4H LTCUSD chart is an even clearer picture of coiling, or the loss of volatility. This suggests that the breakout from the range in the 1H chart should first be seen as a sign of volatility, and second as a sign of direction. The sign for direction would be week at first. So if price breaks below 1.78, we would like to see another failed bullish attempt before considering downside risk towards the 1.08-1.10 low on the year.
A break above 1.90 would open up 2.00-2.05, and then the 2.44 high. Again, we would like to see price treat this week’s mini range as support before considering the outlook towards 2.44.
Overall, even though price has been without direction in February, we should keep a slight bearish bias because the medium to long-term outlook (since 2014), has been bearish.
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