- LTC was in price correction mode but in a bullish market structure
- Short-term LTC holders have made massive profits in the past two days
Litecoin [LTC] staged a massive mid-week rally, hitting $83.6, its highest level since mid-May. At the same time, BTC regained the psychological bar of $16,000. However, at the time of writing, BTC had lost 1.5% in the past 24 hours, forcing LTC into a price correction.
At press time, it was trading at $75.26 and seemed determined to drop further. The next new supports could be at the 61.8% and 50% Fib retracement levels if LTC maintains the downtrend. Redemptions from these levels could allow you to lock in profits.
The 78.6% Fib support is about to be broken: will it drop further?
The 78.6% Fib level was an important support zone and a bullish order block line. It has been tested several times on the 4-hour chart and could be breached. At press time, the bears were threatening a bloodbath just below that level.
Technical indicators also suggest the possibility of a prolonged bloodbath as the bears slowly take control. The Relative Strength Index (RSI) retreated from overbought territory with an extended decline. This indicates a massive drop in buying pressure which is slowly allowing sellers to gain momentum.
Additionally, the On Balance Volume has recorded a downward trend, indicating a decrease in trading volume and buying pressure. Overall, the indicators suggest that the sellers will gain ground within a few hours or a day.
In this case, LTC prices could drop further and find new support areas between 61.8% ($69.9) and 50% ($65.66). LTC’s downtrend could continue if BTC loses its support at $16,000 and drops further.
However, a candlestick close above the current support ($75.96) would invalidate the bias above. In such an event, LTC could trade sideways along the 78.6% and 100% Fib pocket levels or break through resistance.
Short-term SLD holders reap huge profits, but….
The 30-day market value to realized value (MVRV) is positive, according to Saniment The data. This means that short-term SLD holders have seen record gains since Tuesday, November 22. This period also coincides with positive weighted sentiment.
However, trading volume declined and weighted sentiment moved into negative territory at press time. This could indicate that a price reversal is imminent and LTC may be heading south.
Short-term LTC investors should therefore monitor BTC performance and LTC sentiment before trading.