Litecoin Poised to Retrace Before Entering New UptrendFebruary 5, 2021
- Litecoin spiked over 12% in the past 24 hours before correcting again.
- The bullish impulse came after LTC breached the $139 resistance level.
- Now, this cryptocurrency is primed to advance to $187 but may offer sidelined investors an opportunity to get back into the market.
Litecoin seems to be breaking out of a three-week-long consolidation period, but a particular technical indicator points to a correction before it advances further.
Litecoin Primed to Regain Lost Ground
Litecoin took a 39% nosedive to hit a low of $113 a few hours after peaking at a high of $185 on Jan. 10. Since then, this cryptocurrency entered a consolidation phase where its price made a series of lower highs while the $120 support level was able to reject any further downward pressure.
Such price behavior seems to have formed descending triangle on LTC’s 4-hour chart.
As buy orders began to pile up behind Litecoin on Jan. 2, its price was able to break through the triangle’s hypotenuse at $139. The spike in the buying pressure has pushed LTC’s market value by more than 12% in the past 24 hours, but the bullish impulse is far from over.
By measuring the distance of the triangle’s widest range and adding it to the breakout point, it forecasts that Litecoin is prime to rise another 22% to hit a target of $187.
A Small Correction Before Higher Highs
But first, the Tom Demark (TD) Sequential indicator suggests that this altcoin will retrace before it achieves its upside potential. This technical index presented a sell signal in the form of green nine candlesticks within the same time frame, forecasting a one-to-four 4-hour candlesticks correction.
A glimpse at Litecoin’s 4-hour chart shows that the TD setup has been incredibly accurate at anticipating local tops on this altcoin’s trend. The last three sell signals presented over the past few weeks were validated, resulting in substantial pullbacks.
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model reveals that Litecoin sits on top of a massive demand barrier. Based on this fundamental indicator, over 128,000 addresses had previously purchased more than 5.30 million LTC between $136.30 and $141.20.
As such, further price depreciation may prove challenging given the strength of this support wall.
It is worth noting that based on the IOMAP cohorts, there aren’t any significant hurdles ahead of Litecoin that may prevent it from advancing further. Therefore, a potential pullback could serve as a buy-the-dip opportunity for sidelined investors that propels LTC towards the triangle’s target at $187.
Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.
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