At press time, however, the price seems to be recovering and probably heading up North.
The one-hour chart of Litecoin showed that the price broke out of the rising wedge. In addition to the above, this pattern is also the reason why the price tanked. Since its breakout, the price has found support from the 200-day moving average [DMA, purple].
Furthermore, the bearish crossover between the 20 DMA and 50 DMA implies a bearish regime for Litecoin [unless the price recovers with a quick surge]. For now, the price looks bullish mainly due to two reasons per se.
The RSI indicator and the on-balance volume are both on the decline due to yesterday’s crash. Since both indicators look bottomed, there is a chance for the bulls to make a comeback here. Furthermore, RSI has already surged from the oversold and into the normal range indicating a slow surge in the longs.
Looking at the long vs. short data available at DataMish, it is clear that the longs have overwhelmed the shorts. The total longs vs. shorts, at press time, were 93% and 7%, respectively, further indicating a long play in the near future.
Correlation of crypto’s gold to silver
The correlation of Litecoin with Bitcoin has constantly surged since the start of February. On February 10, the correlation was 0.79 and 0.83. The higher the correlation, the more closely the Litecoin’s price will follow Bitcoin.
This gives rise to a new possibility for Litecoin, a bearish possibility arising out of the strong correlation between LTC and BTC. Since Bitcoin’s price looks mildly bearish, a drop in its price would cause LTC to do the same. With that in mind, if BTC tumbles, Litecoin would head towards its support at $56.