Disclaimer: The results of the following analysis are the sole opinions of the author and should not be construed as investment advice
Litecoin has drawn a lot of retail investor attention lately. The Alt’s on-chain metrics appear healthy and it has made its way onto the development front as well. Spurred on by the recent popularity of smart contract applications and NFTs, Litecoin announced plans to break new ground through OmniLite.
On the charts, however, a broader sell-off appeared to have replaced bullish sentiment in the LTC market. After making a local high at $ 233.5, the digital asset fell 33% and found its way into a key support zone.
Since private investors are taking a break, it is to be expected that Litecoin will move sideways in the coming days until a defined trend becomes apparent. At the time of writing, LTC was valued at $ 182.6 and had a market cap of $ 12 billion.
Litecoin daily chart
Before Litecoin hit a local high at $ 233.5, its price fluctuated largely between the $ 160 and $ 190 channels. During this period, volumes were relatively low as the price consolidated after the uptrend in July. A high volume breakout allowed LTC to climb higher and climb above its 200 SMA (green) daily – a sign that LTC’s bear market has finally been broken after the May 19 sell-off.
The joy was short-lived, however, as panic selling LTC moved south and a single Candlewick fell as low as $ 160. At the time of going to press, the price was back within the above-mentioned channel and could trend sideways in the coming days.
If sellers trigger another round of selling pressure, LTC would need to hold above $ 155 to avoid switching to a bearish outlook.
The daily RSI stayed near the half-line, indicating that the market has had some buying pressure that has set in after the recent losses. The + DI of the Directional Movement Index was close as neither side was too dominant. Additionally, the ADX moved south from 28, implying that the market was moving towards equilibrium.
While retail investors have been helping LTC lately, the On Balance Volume suggests that buying pressures are still far from April and May levels. For a stronger rebound towards May highs, LTC would need long-term investors and whales to rise.
Litecoin could hover between $ 160 and $ 190 in the future – a channel that was active throughout August. Meanwhile, a broader market rally would bring temporary relief, but the gains would be short-lived.
On the flip side, traders need to watch out for a closing price below $ 155 as this could pull LTC to its lows of $ 105 in late July.