Litecoin is trading with a positive bias as short sellers run for cover. The cryptocurrency is trading 13.44 percent higher at $2.870 as oversold conditions give way to profit booking. But this probability was already discussed in the previous Litecoin technical analysis Next Target $2.000. Adding to the comfort of the cryptocurrency is the sharp advance in Bitcoin.
I am of the opinion that the current rally is a trap and that market participants should rather consider shorting Litecoin on a rise by placing a stop-loss above $3.200. And below are the latest technical indications which are compelling me to think so.
Litecoin Chart Structure – Yesterday’s rally was accompanied by a good trading volume, but that was mostly fueled by short covering. The cryptocurrency is expected to breach its immediate support of $2.750 in the coming sessions.
Moving Average Convergence Divergence – The MACD and the Signal Line extend their losing streak by another day. The last observation for MACD was made at -0.2965 while that for Signal Line was made at -0.1991. The Histogram remains stuck in the negative territory with a value of -0.0974.
Momentum – The Momentum indicator suggests that the price rise is not a reason to celebrate with its value of -1.0540.
Money Flow Index – Litecoin is barely staying away from the oversold region as conveyed by the MFI value of 20.2199.
Relative Strength Index – The RSI value continues to show a decline in reading even as the price jumps. The latest value is 31.6810.
Due to the extremely volatile nature of Litecoin, it is very hard to call a top for this jump, however, market participants must use a further advance to go short by placing a tight stop-loss above $3.200.
Also, keep tracking the Bitcoin market for valuable insights.
I believe we will see lower levels in Litecoin soon.