Litecoin has completed a massive Head & Shouders pattern with a breech of the neckline at $80. Worryingly, this pattern projects a possible target price for the Litecoin correction of under $10. Obviously the question that needs to be answered if will it correct so dramatically, and if not why not?
This is a formation I have been watching for over a month now and I have concluded that we will not drop to the lows indicated and here are my reasons
Firstly, the H&S is just an indicator of what is historically likely given the preceding pattern of trading activity is indicative of bearish sentiment. While the patter is noteably for its accuracy, there are many examples of where it doesn't play out as projected. One recent example is Gold, where a H&S pattern was overwhelmed by bullish sentiment due to prevailing fundamentals.
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As with Gold, there are significant bullish fundamentals for the Crypto market and for Litecoin in particular. Indeed, practically all of the fundamentals supporting the bullish case for Gold extend to Bitcoin and to the major Alt-coins, such as Litecoin. That is, scarcity, a store of value outside of an ever increasingly suspect economic system, a safe haven for economic uncertainty of trade wars and hot wars, proven reliability.
On top of that, we have recently heard in the media that Bakkt is set to open Bitcoin futures trading on September 23. Notably, this is supposed to be a 100% asset backed contract that presumably, will in itself add to the demand, scarcity and value of Bitcoin. However, Bakkt claims its intention is for trading digital assets (plural) so there should be full expectation that just like the CME trades Gold and Silver contracts, Bakkt will trade Bitcoin and Litecoin contracts.
So at a time of global economic uncertainty and the birth of a new crypto trading paradigm, the bullish fundamentals for Litecoin and the major crypto currencies is strong and will likely overwhelm the technical patterns on the chart, as Gold has done this year.
That's not to say that there is no significance in this H&S pattern. I believe that it is indicating that for crypto currencies that are not well regarded and in a strong position to hold favour with investors looking at safe alternatives for preserving both value and liquidity, then the technicals in the charts will hold sway and a harsh correction will occur. Manly because in uncertain times, speculative investments are dropped as the smart money seeks value-preserving safe havens, that are a proven store of value, are highly liquid and, above all, are accessible and transportable.
Of the top coins in the crypoto complex, Litecoin would have to be included in any objective measure of safe. So I think it will track Bitcoin rather than crash and burn as the chart might project.
This is a formation I have been watching for over a month now and I have concluded that we will not drop to the lows indicated and here are my reasons
Firstly, the H&S is just an indicator of what is historically likely given the preceding pattern of trading activity is indicative of bearish sentiment. While the patter is noteably for its accuracy, there are many examples of where it doesn't play out as projected. One recent example is Gold, where a H&S pattern was overwhelmed by bullish sentiment due to prevailing fundamentals.
As with Gold, there are significant bullish fundamentals for the Crypto market and for Litecoin in particular. Indeed, practically all of the fundamentals supporting the bullish case for Gold extend to Bitcoin and to the major Alt-coins, such as Litecoin. That is, scarcity, a store of value outside of an ever increasingly suspect economic system, a safe haven for economic uncertainty of trade wars and hot wars, proven reliability.
On top of that, we have recently heard in the media that Bakkt is set to open Bitcoin futures trading on September 23. Notably, this is supposed to be a 100% asset backed contract that presumably, will in itself add to the demand, scarcity and value of Bitcoin. However, Bakkt claims its intention is for trading digital assets (plural) so there should be full expectation that just like the CME trades Gold and Silver contracts, Bakkt will trade Bitcoin and Litecoin contracts.
So at a time of global economic uncertainty and the birth of a new crypto trading paradigm, the bullish fundamentals for Litecoin and the major crypto currencies is strong and will likely overwhelm the technical patterns on the chart, as Gold has done this year.
That's not to say that there is no significance in this H&S pattern. I believe that it is indicating that for crypto currencies that are not well regarded and in a strong position to hold favour with investors looking at safe alternatives for preserving both value and liquidity, then the technicals in the charts will hold sway and a harsh correction will occur. Manly because in uncertain times, speculative investments are dropped as the smart money seeks value-preserving safe havens, that are a proven store of value, are highly liquid and, above all, are accessible and transportable.
Of the top coins in the crypoto complex, Litecoin would have to be included in any objective measure of safe. So I think it will track Bitcoin rather than crash and burn as the chart might project.
Comment:
Sorry, here is the Gold Chart:
Comment:
So we are almost at the end of August and have reached the 0.618 Fibonacci projection indicated at $64. This coincides with a support level confirmed on April 30 and could be the swing low for Litecoin ... except that there is still weakness in Bitcoin.
Litecoin will retest $64 after bouncing off it, is doing so now actually and if broken to the downside, we may see the 0.786 projection at $52.46 come into play.
Litecoin will retest $64 after bouncing off it, is doing so now actually and if broken to the downside, we may see the 0.786 projection at $52.46 come into play.
Comment:
So, after two weeks in my target zone between $64 -$70, LTC has broken up to another higher high, hitting $73.
We can see that price has been well contained within a rising parallel channel of higher-highs and higher-lows these past two weeks, testing and being rejected by upper resistance 3 times. With the RSI rising and the MACD expanding bullish, one could be expecting a break of this channel with a test of $75 resistance level.
However, we can notice that the volume is still declining, so it is very likely that if volume doesn't pick up, price might fall back down to test the lower support level of the channel, before any convincing rally to the upside is sustained.
Looking at a broader perspective in the weekly timeframe, though, and we can see some very bullish indicators that the corrective period may well be over. Not only is there an ABC pattern completed at Fibonacci ratios, but we can see a weekly inside bard formation that will be a major bullish signal, if the current candlesticks closes above the previous close.
So some very good reasons to suspect that LTC may be leading the crypto complex out of this corrective period.
***
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www.patreon.com/cryptoswing
We can see that price has been well contained within a rising parallel channel of higher-highs and higher-lows these past two weeks, testing and being rejected by upper resistance 3 times. With the RSI rising and the MACD expanding bullish, one could be expecting a break of this channel with a test of $75 resistance level.
However, we can notice that the volume is still declining, so it is very likely that if volume doesn't pick up, price might fall back down to test the lower support level of the channel, before any convincing rally to the upside is sustained.
Looking at a broader perspective in the weekly timeframe, though, and we can see some very bullish indicators that the corrective period may well be over. Not only is there an ABC pattern completed at Fibonacci ratios, but we can see a weekly inside bard formation that will be a major bullish signal, if the current candlesticks closes above the previous close.
So some very good reasons to suspect that LTC may be leading the crypto complex out of this corrective period.
***
Don't forget, you can drop in on me via Patreon if you like what I do and support my effort for the cost of a cup of coffee.
www.patreon.com/cryptoswing
If you would like more views and insights, for the cost of a cup of coffee, join me on Patreon: www.patreon.com/cryptoswing