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Analysis

Litecoin’s make or break situation: 16% surge or retest 2018 lows?

Akash Girimath

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Litecoin's make or break situation,16% surge or retest of 2018 lows?
Source: Unsplash

Litecoin, like other altcoins, has experienced a rough patch considering the recent drop in Bitcoin’s price. Owing to its correlation with Bitcoin, Litecoin has dropped by 41% in the last 30 hours or so.

Overall, the price has dropped by 70% since February 13. However, the price seems to be moving sideways at press time. With the price hovering at $31.50, Litecoin formed an ascending triangle, which usually has a bullish break.

Four Hour Chart

Source: LTC/USD TradingView

The four-hour chart for Litecoin showed formation of an ascending triangle with two bottom and top touches. The pattern will be completed in 48 – 72 hours leading to a breakout. Although there is mild bullish bias, there is still a chance for it to breach lower if the overall market dips.

RSI rising higher and above the oversold zone lends support to the bullish bias scenario. Hence, a further rise would push the price to the upper line of the triangle, which is 16% away from its current price of $31.50.

Further bullish pressure and breakout will cause the price to hit resistance at $45.39 and $51.42. However, as mentioned above, if there is a bearish breakout, the price will dip directly to its previous bottom at $22, which would be a 30% drop from the current price.

Correlation and Returns

Source: Coinmetrics

Litecoin’s correlation with Bitcoin has skyrocketed in the last 30 days and the 180-day correlation has hit 0.8604, a new yearly high. With such a high degree of correlation, the price is bound to follow BTC.

Due to a massive cut in Bitcoin’s price, all altcoins have suffered a bearish fate. As mentioned above, Litecoin has felt the tremors as well, due to which, the returns have been affected as well. At press time, Litecoin’s yearly return was negative -27%.

Conclusion

For now, Litecoin looks rather bullish due to the formation of an ascending triangle. The targets on the higher side include $45.39 and $51.42, however, targets on the lower side include 2018 lows of $22.

Akash is a full-time cryptocurrency writer and an analyst at AMBCrypto. He is an engineering graduate with an avid interest in finance and economics. Attracted to the chaos of trading, Akash has invested in BTC, ETH and XRP for educational purposes.

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