web analytics

Litecoin grapples with ‘double top’ risks after LTC price rallies 37% in November


A 37% November worth rally in Litecoin (LTC) dangers exhaustion because the “silver cryptocurrency” hints at forming a double prime chart sample.

The classic bearish reversal setup seems when the worth varieties two consecutive peaks of just about the identical top, with every upside transfer assembly with a powerful correction towards a typical assist degree, known as the “neckline.”

Related articles

Sometimes, the worth breaks beneath the assist and falls by as a lot as the utmost top between the double prime’s peak and neckline.

So it seems, Litecoin is midway by way of forming a double prime sample, as proven within the chart beneath.

LTC/USD four-hour worth chart that includes “double prime” sample. Supply: TradingView

Intimately, LTC’s price peaked out on Nov. 10 close to $295.50 — the primary prime — earlier than correcting decrease towards the neckline assist of round $249. That adopted up with a rebound to $280 — the second prime — ultimately attracting profit-takers to trigger a minor correction, which continues to be underway.

Litecoin would wish to increase its selloff to retest the neckline. In the meantime, breaking beneath the assist degree would activate the double prime breakout setup, with the revenue goal sitting close to $200.

The Bitcoin correlation

Litecoin’s bearish reversal sample is rising when inflation in the United States has surged to a three-decade excessive, prompting traders to hunt a hedge throughout varied monetary devices.

As an example, probably the most actively traded gold futures currently posted to its finest week in six months, leaping 2.9% to $1,868.50 per troy ounce, after the U.S. Labor Division reported a rise within the client worth index (CPI) by 6.2% year-over-year. That marked the fifth-straight month of inflation above 5%.

Many traders and/or merchants turned to Bitcoin (BTC) after perceiving it as a security internet towards rising inflation, famous Wilfred Daye, head of Securitize Capital — the asset-management arm of Securitize Inc — admitting that folks have picked the cryptocurrency as a hedge regardless of its regarding worth volatility.

“We don’t have lengthy sufficient historical past to say Bitcoin is certainly an inflation hedge,” Daye said, including:

“I might argue that gold is a greater inflation hedge nonetheless. However Bitcoin as an inflation hedge is a brand new attractive idea — folks love new concepts.”

Bitcoin’s progress has additionally helped altcoins rise in tandem due to its broader affect throughout the crypto market. Litecoin has been one of many beneficiaries of the rally, with its one-year correlation effectivity with Bitcoin standing at 0.71 above zero, per knowledge collected from Cryptowatch.

LTC/USD versus BTC/USD four-hour worth chart. Supply: TradingView

In consequence, issues over persistently larger inflation have acted as a tailwind for Litecoin positive aspects by way of Bitcoin. That might considerably play spoilers for the bearish double prime setup offered above — and validate a bullish sample that has been energetic since final weekend.

Litecoin “bull pennant” places LTC goal at $350

Dubbed a bull pennant, the bullish continuation sample seems when the worth consolidates sideways inside a triangular construction after a powerful rally upward. Merchants verify a bullish breakout when the worth breaks above the triangle’s higher trendline with robust volumes.

Associated: Litecoin hits 6-month high as LTC price soars 20% in 24 hours

In doing so, they eye the extent at size equal to the peak of the earlier uptrend (aka flagpole) as their revenue goal. In consequence, Litecoin’s worth eyes an prolonged upside transfer towards $350, as proven through the setup within the chart beneath.

LTC/USD 4-hour worth chart that includes bull pennant setup. Supply: TradingView

In the meantime, failing to have a decisively bullish follow-through dangers activating the double prime setup. That brings the “multi-month ascending trendline assist” within the image as the subsequent draw back goal ought to there be a bearish breakdown transfer; coincidentally, the goal can be close to $200.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, it’s best to conduct your personal analysis when making a choice.