LTCUSD continues to slide after recently bouncing off an area of interest and strong resistance around $175. Price is now testing the 61.8% Fibonacci extension level on its move lower and could be poised for more losses until the channel support or full extension.
The next potential floor is around the 76.4% extension at $101 near the channel support. Stronger bearish momentum could take it down to the bottom of the channel at $79.324.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to carry on than to reverse. In addition, the 100 SMA lines up with the channel top to add to its strength as a ceiling.
The gap between the moving averages is widening to reflect stronger selling momentum. However, the oscillator is already in the oversold region to reflect exhaustion among sellers. RSI has more room to fall before hitting oversold levels, so LTCUSD could keep heading south.
Risk aversion came in full swing as the volatility index jumped to record levels while equities erased most of their gains for the year in a steep single-day drop. Many say that this was merely a much-needed correction, but it’s notable how cryptocurrencies were unable to take advantage.
The likes of litecoin, bitcoin, and other altcoins continue to reel from increased scrutiny by several regulatory agencies. Apart from that, ECB Governor Mario Draghi’s remarks on bitcoin also dragged other cryptocurrencies like LTCUSD down. He said that it is a risky investment and that their supervisory arm is already looking into the risks that could be posed on other financial institutions.
Meanwhile, the dollar has drawn support from the return in risk aversion. Data from the US has been mostly stronger than expected, which also explains the support for the safe-haven currency.