Litecoin: LTC is up nearly 30% in recent days, will the trend continue?
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Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Litecoin could see a pullback in the coming days
- Technical factors showed that LTC would maintain a bullish outlook even if the pullback occurs
Litecoin saw a huge spike from $55 to $69.9 earlier this week. The rally is likely to continue its momentum to reach $80 next week. Trading volume has been high in recent days, which showed genuine demand behind the rally.
Bitcoin was also an important factor in this equation. With a correlation of +0.81, LTC was very likely to follow the trend of the king of cryptocurrencies. If Bitcoin can defend $20.9k and push north once more, another move up for Litecoin could materialize.
Since June, Litecoin has traded within a range (yellow) of $64.7 to $43.6. The midpoint of this range was at $54. Since mid-September, Litecoin has been consolidating around this level. Last week, it was able to turn the value from mid-range to support.
During this time, the Relative Strength Index (RSI) was also able to rise above neutral 50. The bullish momentum indicator came hand in hand with an increase in trading volume in recent days.
The resistance band near the $64 range highs was a bearish order block since early September. The breakout beyond the range showed that a retest of the same resistance band would likely see a bullish reaction.
The Stochastic RSI was in the overbought territory on the daily time frame, as was the RSI. In May, the $65-$73 area was one where Litecoin constituency.
At the time of writing, this zone could pose strong opposition to the bulls' attempts to push prices higher. Therefore, a pullback to $64 and a period of sideways price action could ensue over the next week or two, before another leg to the upside.
LTC Social Domination
Litecoin funding rate was positive in recent weeks. This highlighted the fact that speculators were bullish. Social dominance soared in recent days as the rally of almost 29.9% captured the imagination of market participants.
Meanwhile, the dormant circulation metric (90 days) showed that there was no sudden increase in the movement of coins that had been dormant in the last 90 days. Therefore, longer-term Litecoin holders did not feel the need to sell yet, suggestive that the rally could be fueled further.
While a retest of $63.9 would offer a buying opportunity, it was not yet apparent that LTC could go higher once again. The invalidation of the $80 upside target for Litecoin would be a daily session closing below $58.2.
Nov 06, 2022