Litecoin (LTC) has emerged as one of the rare winners in the current cryptocurrency market crash led by the collapse of the FTX exchange.
The price of LTC exceeds that of BTC and ETH
The altcoin born in 2011 It is up nearly 16% year to date (MTD) to hit $62.75 on Nov. 22, outperforming its main rivals Bitcoin (BTC) and Ether (ETH).which have lost approximately 25% and 30%, respectively, in the same period.
Furthermore, the price of the LTC/BTC pair also rose to new heights, gaining 50% in November to set a new yearly high of 0.003970 BTC on November 22.
As Cointelegraph reported, Litecoin deviated from the cryptocurrency market’s downtrend earlier this month with its halving scheduled for August 2023. LTC has also received a back from none other than Michael Saylor for being a “digital commodity” similar to Bitcoin.
Michael Saylor says #Litecoin is also likely a digital commodity like Bitcoin: pic.twitter.com/7N19IpxtSe
—Altcoin Daily (@AltcoinDailyio) November 18, 2022
However, signs of bullish exhaustion are appearing.
Litecoin Price Fractal Hints at a 50% Correction
Litecoin’s rally against Bitcoin has made the LTC/BTC pair overvalued, according to its weekly Relative Strength Index (RSI) reading.
In particular, the weekly RSI of the LTC/BTC pair, which measures the speed and change of the pair’s price movements, rose above 70 on Nov. 22. An RSI reading above 70 is considered overbought, which many traditional analysts see as a sign of an imminent bearish reversal.
Historically, Litecoin’s overbought RSI readings against Bitcoin have been followed by major price corrections. For example, in April 2021, the rise of the RSI of the LTC/BTC pair above 70 was met with a strong selling reaction, which ultimately pushed the pair down 75% to 0.001716 BTC in June 2022.
In the same way, an overbought RSI in April 2019 led to a 70% LTC/BTC price correction by December 2019.
The same RSI fractal now hints at the possibility of Litecoin suffering a 50% breakdown against Bitcoin if it joins the LTC/BTC multi-year descending channel pattern, as shown below.
Typical LTC/BTC pair turns overbought after hitting the upper trend line of the channel, which follows with a correction towards the lower trend line.
As a result, the pair risks falling to or below 0.001797 BTC in December 2022 if the fractal repeats, down more than 50% from current price levels.
Conversely, a decisive break above the upper trend line could see the LTC/BTC pair test its 200-week exponential moving average (200-week EMA; the blue wave) at 0.005319 BTC, up 30%. current price levels, as the next bullish target.
The “bearish flag” of the LTC/USD pair
Litecoin sees a similar price crash against the US dollar as it paints a bear flag pattern on the weekly charts.
Bearish flags are bearish continuation patterns that appear when price consolidates higher within a rising parallel channel range after a strong downward move (called a flagpole).. They are resolved after the price breaks below the lower trend line and falls by as much as the height of the flag pole.
LTC has been trading within the bear flag range, with its sights set on a break below its lower trend line support around $55. The downside target for the bear flag is around $32.40 if it breaks below said support decisively.
In other words, a 50% decline by December 2022.
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