Litecoin ‘head fake’ rally? LTC price technicals hint at 65% crash

Litecoin (LTC) has rebounded by 130% to almost $100 after bottoming out near $40.50 in June 2022. The primary reasons include broadly improving risk-on sentiment and euphoria around Litecoin’s upcoming halving in August 2023.

Nonetheless, technicals recommend that LTC might wipe out most of those beneficial properties within the coming months.

LTC worth paints large bear flag 

Litecoin stands to pare its beneficial properties primarily as a consequence of an enormous bear flag on the weekly chart.

A “bear flag” is a bearish continuation sample that happens when the value consolidates inside an ascending, parallel channel after present process a robust downtrend. It resolves after the value breaks under its decrease trendline with an increase in buying and selling volumes.

Litecoin has been portray an analogous sample since early June 2022. Beforehand, the LTC/USD pair had undergone a 70% worth correction from $130 to $40.50. Thus, from the technical perspective, it might resume its downtrend course if its worth breaks under the decrease trendline.

As a rule, a bear flag breakdown transfer prompts the value to fall by as a lot because the earlier downtrend’s size. Making use of the identical setup to Litecoin brings its bear flag draw back goal to almost $30.50, or 65% decrease than the present LTC worth.

Litecoin worth “head pretend”?

As mentioned earlier, Litecoin‘s worth restoration has primarily occurred in step with related strikes throughout the risk-on market due to cooling inflation.

For instance, the Nasdaq-100 stock market index has risen approximately 15.50% between October 2022 and January 2023. Similarly, Bitcoin (BTC) has rallied by greater than 50% since its November 2022’s low of round $15,500.

The weekly correlation coefficient between Litecoin and the Nasdaq-100 has been largely constructive at 0.35 on Jan. 27. Equally, the correlation between Litecoin and Bitcoin is now round 0.21.

However Mark Haefele, the chief funding officer at UBS World Wealth Administration — together with different many different analysts — has noted that the continuing risk-on rally might be a “head pretend.” In easy phrases, the continuing Litecoin rally, below the affect of its risk-on counterparts, might be short-lived. 

Impartial market analyst Capo of Crypto additionally agrees, noting:

“The best way the upward motion is going on, the way in which [higher-timeframe] resistances are being examined… it clearly appears to be like manipulated, no actual demand. As soon as once more, the largest bull lure I’ve ever seen.”

Bullish state of affairs for Litecoin

Nonetheless, not everyone seems to be bearish on danger property resembling Litecoin. Well-liked market analyst Rekt Capital sees Litecoin rallying towards $160 within the coming weeks, citing a month-to-month chart setup as proven under.

Notably, the chart exhibits LTC‘s worth present process a robust rebound transfer after testing a multiyear ascending trendline resistance contained in the $40 to $50 space, which might qualify it for an additional uptrend towards the $120–$160 vary.

These upside targets have beforehand acted as helps and resistances. Breaking this key resistance might subsequently invalidate the bear flag setup, which occurs 54% of all time, in keeping with research by veteran investor Tom Bulkowski.

This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes danger, and readers ought to conduct their very own analysis when making a choice.