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Analysis

Litecoin’s price recovery could be stalled by rising wedge

Chayanika Deka

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Source: Unsplash

Litecoin’s price has continued to underperform in the cryptocurrency market. While the coin posted impressive gains over the first few months of the year, from trading below $35 to surpassing $100 in a matter of three months, it soon failed to retain the upward momentum and fell shortly after its halving event.

The latest market dip has driven the price below the crucial $50-mark. According to data from CoinMarketCap, LTC was trading at $48.31 after a minor decline of 0.05% over the past 24 hours, at press time. Additionally, the coin recorded a market cap of $3.09 billion.

LTC 4-Hour Chart

Source: LTC/USD on TradingView

As Litecoin’s price hinted at a possible recovery, at press time, the coin’s 4-hour chart indicated the formation of a rising wedge pattern, with the price bouncing between two up-sloping and converging trendlines. This was indicative of a bearish breakout in the near-term for the silver crypto. The decline in volume over the same period further confirmed the validity of the pattern.

The 100 moving average was way above the 50 moving average which suggested a bearish phase for the coin. If the downtrend materializes, the coin could spiral down to an 8-month low value and subsequently test the support at $43, a level unseen since March 2019. LTC found immediate resistance at $50.73, followed by another resistance at $54.88.

Source: LTC/USD on TradingView

The MACD indicator also suggested a bearish phase for the coin as MACD continued to hover below the signal line following a bearish crossover prompted by the latest market dip. The RSI was above the 50-median, with this indicating a growing buying pressure among LTC investors.

Conclusion

With the coin struggling to hold its position at $48, a break on the positive side in the near-term was not on the cards. The aforementioned prediction signaled a potential bearish price breakout which could lead the coin to fall below its support point at $43.

Chayanika is a full-time cryptocurrency journalist at AMBCrypto. A graduate in Political Science and Journalism, her writing is centered around regulation and policy-making regarding the cryptocurrency sector.