Litecoin (LTC) price suffered a sharp sell-off last week and lost an important Fibonacci support level.
Unless the price can quickly recover it, more downsides are expected for Litecoin price.
Litecoin price is showing bearish signs at the resistance
LTC price has been rising since June 2022 and reached a yearly high of $105.70 in February. However, the price was unable to clear the $100 horizontal resistance area and was rejected twice.
This is a negative sign. This rejection resulted in a double top, which is a bearish pattern where the price drops twice from the same area, resulting in a significant decline.
In addition, the recent rejection resulted in a bearish engulfing candle. This is a type of candlestick pattern that indicates a downtrend reversal.
This pattern occurs when the previous period’s gains are completely eliminated, and is confirmed when the current period’s close is lower than the previous period’s opening. In the case of LTC, this happened.
After that, the Relative Strength Index (RSI) indicator supports the continuation of the decline. Using the RSI indicator as a momentum indicator, traders can determine whether the market is overbought or oversold and decide whether to accumulate or sell an asset.
During the double top, LTC price and the RSI generated a bearish divergence. A bearish divergence is an occurrence in which an increase in momentum is not accompanied by an increase in price.
LTC Price Prediction: Is More Downside Expected?
Technical analysis from the daily timeframe supports the possibility of more bearishness in the future price. The main reason for this is the loss of the 0.382 Fibonacci retracement support level and its validation as resistance.
The Fibonacci retracement levels theory suggests that after a significant price move in one direction, the price will partially retrace or return to the previous price level before continuing in its original direction. This principle can be used to determine the peak of potential future upward movements.
After dropping below 0.382 fib level at $89, LTC price is in the process of being validated as resistance (red icon). If successful, this could potentially lead to a drop to 0.618 fib at $80.
Given all of the above indications, the ongoing downtrend will likely see LTC finding support at the long-term ascending support line at $74. However, if the price gains momentum and breaks the resistance, a rally to the 12-month high of $130 is likely.
Despite this bearish analysis for LTC price, a close above $89 area would mean that the trend is not bearish. Therefore, the price may rise to the long-term resistance level at $100 again.
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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.