Saturday, September 23, 2023

‘Double Top’ Risk on Litecoin


A 37 percent price increase in Litecoin (LTC) in November is at risk of exhaustion. This is as the “silver cryptocurrency” appears to be building a double top chart pattern.

When price develops two successive peaks of almost equal height, a sharp decline into a similar support level meets each higher rise. This is known as the “neckline,” forming a classic bearish reversal scenario.

Typically, the price breaks through the support and falls as far as the maximum height. This occurs between the peak and neckline of the double top.

Litecoin looks to be halfway through producing a double top formation.

LTC’s price peaked around $295.50 on Nov. 10 — the first top — before dropping lower to roughly $249, the neckline support. Following that, a comeback to $280 — the second peak — attracted profit-takers, causing a modest downturn that is currently ongoing.

To retest the neckline, Litecoin would have to prolong its selloff. Breaking below the support level, on the other hand, would trigger the double top breakout scenario. This is with a profit objective of about $200.

The bearish reversal pattern in Litecoin is forming at a time. A time when US inflation has reached a three-decade high, encouraging investors to seek a hedge across numerous financial assets.

For example, when the US Labor Department announced a 6.2 percent year-over-year increase in the consumer price index (CPI), the most commonly traded gold futures recently had their best week in six months. It rose 2.9 percent to $1,868.50 per troy ounce. Inflation was above 5% for the fifth month in a row.

Many investors and/or traders have resorted to Bitcoin (BTC) as a hedge against growing inflation, according to Wilfred Daye, CEO of Securitize Capital, Securitize Inc’s asset management arm. Daye who admits that individuals have chosen the cryptocurrency as a hedge despite its alarming price volatility.

“We don’t have enough history to say Bitcoin is an inflation hedge,” Daye said. He added that “We don’t have enough history to say Bitcoin is an inflation hedge.”

“I still believe gold is a stronger inflation hedge.” However, Bitcoin as an inflation hedge is a novelty – people are drawn to brilliant ideas.”

Because of its larger effect across the crypto industry, Bitcoin’s ascent has aided altcoins in rising in lockstep. According to Cryptowatch statistics, Litecoin has benefited from the surge, with its one-year correlation efficiency with Bitcoin standing at 0.71 above zero.

As a result, fears about rising inflation have functioned as a positive catalyst for Litecoin gains via Bitcoin. That might derail the above-mentioned bearish double top configuration, while also validating a bullish pattern that has been in action since last weekend.

Bull Penant Prediction

The bullish continuation pattern, also known as a bull pennant, comes after a powerful upward rise. It is when price consolidates sideways inside a triangle structure. When the price breaks above the triangle’s top trendline in large quantities, traders confirm a bullish breakout.

As a result, they look for a profit objective at a length equivalent to the preceding uptrend’s height (flagpole). As a result, as the setup in the chart below shows, they poised Litecoin’s price for a long-term rise toward $350.

Meanwhile, if there isn’t a strong bullish follow-through, it will activate the double top setup. If there is a bearish breakdown move, the next downward objective is the “multi-month ascending trendline support”. It is also at $200.

Vincent Sanchez
Vincent Sanchez
Vincent Sanchez currently writes articles for Cryptoconstellation. He completed his Msc in finance and had a successful career as an accountant. Vincent enjoys travelling and working out.

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