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Analysis

Litecoin may mingle at $40, but faces possibility of pennant pattern breach

Biraajmaan Tamuly

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Source: Pixabay

As the dust settled after the much-awaited Bitcoin halving, the collective crypto-industry illustrated a sense of stagnancy on the charts. Bitcoin had steadily climbed above $9000, at press time, but many believe that a wave of corrections is going to the topic of discussion over the next few weeks. However, Litecoin, on the other hand, may possibly face a blow before Bitcoin stands up for its share of depreciation.

Litecoin 12-hour chart

Source: LTC/USD on TradingView

Since late-March, Litecoin has been noting the formation of a rising wedge pattern. The asset’s valuation registered higher highs at $40, $46, and $50, whereas strong higher lows were witnessed t $28, $43, and $45.

On 10 May, Litecoin finally breached its long-term rising wedge pattern as Bitcoin underwent a 15 percent knockdown. Litecoin dropped down to support at $40, but at press time, was valued at $42. That was the last bit of volatility before the halving took place and over the past 3 days, LTC has been able to consolidate between the resistance at $43 and support at $40.

With the chances of another bullish run all but over, Litecoin could possibly maintain sideways movement between $40 and $43, or $43 and $47, for the rest of the month. Litecoin’s main bearish indicator remains intact as its inability to breach above its 200-Moving Average may continue for the near future.

According to the VPVR indicator, the support at $40 is significant and should hold strong over the next few weeks.

Will the bearish pennant rain on Litecoin’s parade?

Source: LTC/USD on TradingView

Now, without ignoring another pattern formed over the last couple of days, it was observed that Litecoin had given rise to a rare bearish pennant on the charts. The breakout possibility of a bearish pennant is usually low in the market, but if the price breaks out of this pattern, Litecoin is looking at a drop down to $37. A possible bounceback from $40 is also believable, but market indicator MACD did not paint an optimistic picture.

The MACD remained strongly bearish, at press time, indicating that a pullback may possibly take place over the next 7 days. Hence, it is critical that Litecoin manages to consolidate above $40 for the next few days, otherwise, another collapse could be on the cards for Bitcoin’s silver counterpart.

Biraajmaan is a full-time journalist at AMBCrypto covering the US market. A graduate in Automobile engineering, he writes mainly about regulations and its impact with a focus on technological advancements in the crypto space.

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