September 18, 2019

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Litecoin entering dangerous territory as slump could mean the dawn of the Death Cross


Litecoin’s post-halving slump should be met with concern. The fifth-largest cryptocurrency in the market has been in a slump since the beginning of the month, with many dismissing it as simply the halving bears. However, the digital silver is now entering dangerous territory.

Since topping out at $144 during the close of June, the price has been in a free fall. At press time, Litecoin was trading below $75, a whopping 47.91 percent below its yearly high. This price depreciation did not happen suddenly, but in gradual phases.

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At first, the price dropped by 15.76 percent between June 26-27, following which the price fell by another 27.31 percent between July 9-14. Between 21-24 July, the price dropped by another 10.39 percent and then finally, between 12-15 August, the price dropped by 16 percent and took the price below $80 for the first time since early May.

DAILY CHART

Looking at the daily chart, Litecoin is forming a falling wedge. The top of the same is structured via lower and lower highs, seen at $133, $123, $98, $89 and finally, $77. Barring one (immediately rectified) drop from $90 t0 $79 seen on July 16-17, LTC has been experiencing lower lows as well. Based on the daily chart, the same are placed at $118, $102, $89, $83, and $75.

The falling wedge is accompanied by a decrease in volume. If the breakout is likely to materialize, it has to be accompanied by investor interest via an uptick in volume. The digital silver is dangerously close to dropping below its key support level of $72.69, as the current price is just below $74. If this does break, the wedge will no doubt prolong itself, and the next support level that will be tested will be $66.34.

In the short-term, resistance is placed at $77, which will definitely be tested if the wedge sees a breakout. Further, the next resistance levels that will be tested are $90 and $101, but the same is unlikely given the peevish movement of Litecoin at press time.

DANGEROUS WATERS

The severely slumping price of Litecoin has been understated. Over the past two months, with LTC dropping by close to 50 percent in value, the coin has dipped below its 50, 100, 150, and 200-day moving averages. The last of the four was witnessed less than 10 days ago, on 14 August, as the price dropped by 10.27% over the day.

Back in May 2018, when LTC was priced at over $160, it slipped below the 200-day moving average. Since then, the price has dropped by 72 percent before moving over the indicator. A move over the same further pushed the coin up by 227 percent to $145 in June 2019. Hence, this indicator bears importance.

Further, the 50-day moving average is also, unsurprisingly, in a slump. If this bearish slump continues, to the degree which it is, the 50-day MA could dip below the 200-day MA, resulting in a death cross for Litecoin and thereby spelling a considerable time with the bears. The two indicators crossed over last on 15 March, when the 50-day MA moved above the 200-day MA. This resulted in a golden cross for digital silver. At the time, LTC was trading at $44.

It should be noted that Litecoin’s MACD indicator has signaled a move up as the MACD line shot above the Signal line on 23 August. Further, the histograms have turned positive for the first time since early August, indicating a mild move upwards.

FINISHING UP

A move out of the falling wedge would result in an immediate test of the $77 resistance level. However, this does rely on the volume moving upwards, as well as the MACD-over-Signal line scenario holding up for a while. On the other side, if the bears continue to maul the LTC market, the cryptocurrency could be in the perils of a death cross, which would signal a price slump for several weeks, if not months.



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