Litecoin (LTC) could rise another 20% amid a rare break from the trend that has already seen LTC outperform most crypto assets in recent days.
LTC’s Not So Bearish Symmetrical Triangle
LTC price broke out of what previously appeared to be a bearish symmetrical triangle.
Symmetrical triangles are trend continuation patterns, which means that the breakout of their range normally causes the price to move in the direction of its previous trend.
Litecoin formed a symmetrical triangle pattern between May and November after falling 70% to almost $40 in the previous sessions. Ideally, The LTC/USD pair could have resolved the pattern by breaking below its lower trend line.
But instead, it broke above the upper trend line in early November, as shown below. According to Edwards and Magee, the authors of Technical Analysis of Stock Trend, the breakout move is rare, given that only 25% of symmetrical triangle breakouts have historically resulted in trend reversals.
Litecoin continued its symmetrical triangle reversal move decisively and now has its sights set on a rally towards $100, or another 20% by December 2022.
This bullish target is measured after calculating the distance between the upper and lower trend line of the triangle and adding the result to the breakout point (around $58 in the case of Litecoin).
Why does the price of Litecoin go up?
Litecoin’s symmetrical triangle breakout move started at the end of October. It coincided with MoneyGram’s announcement that it would allow users to buy, store, and use LTC along with Bitcoin (BTC) and Ether (ETH) for payments.
The LTC breakout lost momentum due to the collapse of FTX in the first week of November and its negative impact on the broader cryptocurrency market. Nevertheless, Litecoin resumed its bullish trend amid speculation about its reward halving in the summer of 2023.
“Litecoin tends to go higher in the months leading up to its halving,” noted market analyst The Digital Trend in his SeekingAlpha op-ed, adding:
“The price then tends to stabilize before entering a longer and more substantial bull market. Then around mid-cycle Litecoin enters a bear/spread phase like Bitcoin.”
Litecoin price could hit $180 by July 2023 if the fractal halving works out as planned, as Cointelegraph covered here.
The bearish take
Conversely, Litecoin may see a short-term correction as its three-day RSI is turning “overbought.” The trigger for the move lower could be the RSI crossing above 70 from its current reading of 68, as shown below.
LTC’s downside price target turns out to be around $40 in the event of a trend correction, roughly 50% below current price levels.
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