Litecoin awaits imminent correction before possible rally

Litecoin, to a large extent, has followed Bitcoin down the rabbit hole in terms of its price action. Despite the unexpected price crash on 12 March, Litecoin had, at press time, managed to recover some of its losses. However for the longest while since then the price of Litecoin has been moving sideways.

Source: Coinstats

At the time of writing, Litecoin was trading at $39 and had a market capitalization of $2.5 billion. Over the past 24-hours, Litecoin noted a 0.5 percent increase in its price, with a trading volume of $2.8 billion.

4-hour chart

Source: LTC/USD, TradingView

According to the 4-hour chart, Litecoin’s price has been in an ascending triangle formation for the past two weeks. In such a scenario, there is the possibility of Litecoin’s price recording a rise in the coming days.

At the moment, for Litecoin, there are two crucial supports that have been tested in the past – $36 and $34. In the unlikely scenario of the price falling further in the coming days, the price of Litecoin is likely to test these supports. However, if the bullish sentiment were to sustain itself, Litecoin’s price could soon test the resistance point at $51. There are two more crucial resistances for LTC at $57 and $64.

Source: LTC/USD, TradingView

On the 4-hour chart, the RSI indicator showed bullish sentiment at the time of writing as the indicator was heading towards the overbought zone and was just above the neutral halfway point. The MACD indicator, on the other hand, had just undergone a bearish crossover as the signal line had just moved above the MACD line.

However, the fact that there wasn’t too much difference between the two may also indicate that a reversal can happen.

Source: Coinmetrics.io

Interestingly for Litcoin, its Bitcoin correlation continues to gain momentum. Over the last week, the correlation rose from 0.74 to 0.88. In the coming days, Bitcoin’s price is likely to go down and may, in turn, affect the performance of Litecoin as well.

Conclusion

Litecoin’s price is likely to see a minor dip towards Target 1 at $36 in the next few days, as per the sentiment implied by the indicators. This may result in LTC losing close to 7 percent of its value in the coming days. However, the unlikely scenario remains, one wherein Litecoin may move towards the $50 mark, recovering all of the losses it incurred on 12 March.