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Bulls Take Control of Litecoin Price Action

While some indicators suggest the trend is facing exhaustion.

Litecoin Price Analysis: Bearish Signs?

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Litecoin hit an important milestone in its trend that could catalyze a new rally. However, contrary to the milestone, a technical pattern is signaling exhaustion.

Demand for LTC is on the Rise

In the last 24 hours, Litecoin experienced a bullish impulse that saw its price surge by 18%. LTC went from trading at a low of $58.30 to a high of $68.90. The sudden upswing allowed LTC to move above its 200-day moving average.

Turning this significant level of resistance into support is usually considered by many technical analysts as a sign that a major bull rally is on the horizon. As a matter of fact, the last time Litecoin was able to cross above its 200-day MA was on Feb. 8 of last year. Following this milestone, LTC surged over 300% to peak at a high of $147 on June 22, 2019. 

LTC/USD chart by TradingView
LTC/USD by TradingView

The moving average convergence divergence, or MACD, also turned bullish recently adding credence to a further advance. This technical indicator follows the path of a trend and calculates its momentum. 

As the 12-day EMA crossed above the 26-day EMA, the odds for a further upward push increased.

LTC/USD chart by TradingView
LTC/USD by TradingView

Despite the bullish outlook, a bearish divergence between the price of Litecoin and the Relative Strength Index (RSI) is forming on LTC’s 1-day chart. 

Divergences occur when the price of an asset is making a series of higher highs while the RSI is making lower lows. Although this technical pattern does not provide a precise selling point, it is a sign that the uptrend is reaching an exhaustion point. 

LTC/USD chart by TradingView
LTC/USD by TradingView

Based on the Fibonacci retracement indicator, if demand for LTC continues to increase the next levels of resistance it will face are $70.54 and $74.40. This is where the 127.2% and 141.4% Fibonacci retracement levels sit, respectively. 

LTC/USD chart by TradingView
LTC/USD by TradingView

Conversely, a spike in the selling pressure behind this cryptocurrency could validate the bearish outlook presented by the RSI divergence. If Litecoin is indeed bound for a pullback before the continuation of the bullish trend, it could try to test the $63.17 support level. Breaking below this price hurdle would likely push its price further down to the next levels of support around $57.40 and $52.80.

It is worth noting that corrections are part of bull markets. In fact, they help maintain a healthy uptrend by presenting an opportunity for sideliners to get back into the market. A fresh inflow of capital is usually followed by a further advance. 

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