LTCUSD looks ready to resume its selloff after encountering resistance at the mid-channel area of interest on its 4-hour time frame. Price could head to the Fib extension levels next.
The 38.2% extension is located at the $165 level then the 50% extension is closer to $150. From there, stronger selling pressure could take LTCUSD down to the channel support at the 61.8% extension or $133 and the 76.4% extension at $114. The full extension is located at $83.14.
The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. This indicates that the selloff is more likely to resume than to reverse. Still, a test of the channel resistance could encounter an additional roadblock at the moving averages.
Stochastic is pulling up from oversold level to signal that buyers are trying to regain control of price action. However, RSI is pointing down and has plenty of room to drop, so LTCUSD might follow suit.
The dollar has regained some support after the US government ended its shutdown, leading to record gains for bond yields and equities as well. Meanwhile, cryptocurrencies have resumed their slump on news that South Korea is starting to take measures to remove anonymity from bitcoin holdings.
In an interview with Business Insider, litecoin founder Charlie Lee mentioned that he’s still worried about the potential for spams in the cryptocurrency market. Apart from that, the recent money flow in the cryptocurrency industry suggests that traders may be piling funds back in traditional markets.
This signals that the selloff could continue as money that has resulted from liquidation of cryptocurrency holdings haven’t circulated in the same sector but rather moved on to others. It would need a really strong catalyst to revive demand for litecoin and other cryptocurrencies, and there appear to be none lined up in the months ahead.