At the time of writing, Litecoin (LTC) seems to be forming a new resistance level around $32.
My bottom expectation comes from the light trading volumes seen since the festive break, which seems to suggest the cryptocurrency community are avoiding trading in Litecoin, even though some recent news points to an increase in adoption by merchants.
At its lowest price levels, the LTC ticker was down by over 92% from last year’s high of $304. While the overall cryptocurrency market looks bearish, Litecoin may be reaching a point where the risk/reward ratio is highly favourable. After all, the price has apparently dropped so low that bottom pickers and possibly smart money has started to take an interest.
Litecoin’s trading behaviour
A look at the weekly chart shows that volume started to significantly decline in January 2018. It became anemic by the end of October.
Nevertheless, volume started to pick up in November 2018 when Litecoin went below $50. Volume has remained relatively healthy since. This may be an indication that participants are once again starting to show interest at these levels.
More importantly, the surge in volume has enabled Litecoin to move up by over 40% from 2018’s low. This price action could be interpreted as a dead cat bounce, meaning a temporary recovery from a prolonged decline that is followed by the continuation of the downtrend. However, due to the lack of interest by the community, it may be too soon to make any conclusions. First, we would expect to see volume dramatically shifting either in an upwards or downwards direction.
Short-term price action
When participants rejected lower prices than $33 in September 2017, price action inspired an epic run that saw Litecoin climb as high as $420 during late December 2017. Now that the market is trading below $33, we could expect to see that same price level acting as a key resistance point.
Above $50 is where Litecoin can really become exciting as the next meaningful resistance level stands at $100.
My short-term projection for the LTC ticker is that it will become bullish as soon as we surpass the $33 resistance level, although we could see an inverse movement if Litecoin breaks below the $23-$30 price range.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.