Litecoin has stayed in a parallel channel at a time when the broader market was lacking a clear direction. However, another attack on the lower trendline exposed LTC to a small sell-off. This was aided by the Awesome Oscillator and MACD, which immediately played in favor of the bears.
On the flip side, bulls could try to respond to the 200 SMA (green) to prevent the sellers from taking over. At the time of writing, LTC was trading at $ 170.8, down a marginal 0.4% over the past 24 hours.
Litecoin 4 hour chart
For the past week, LTC oscillated within a parallel channel from $ 186 to $ 174. With the candles below their 20-SMA and 50-SMA, another attack on the lower trendline developed in the market.
If bears penetrate this defense, a stronger demand zone of $ 163-166 could allow buyers to make a comeback. The near-term support level of $ 155 could also trigger a bullish backlash if needed.
In the meantime, the bulls would be aiming for an early cut-off at the confluence of the 4-hour 200 SMA (green) and the $ 170 price mark. From there, a rebound above the 20-SMA and the centerline of the pattern would put a third top on the upper trendline.
The probability of a failure of the parallel channel resulted from weak readings from LTC’s Awesome Oscillator and MACD. The AO, which is a measure of market momentum, offered sell signals after moving below its half-line after a bearish twin-peak setup. Lower highs were seen along the MACD that threatened to create more selling pressure.
Eventually the RSI was unable to hold support around the midline due to downward pressure in the market. Based on the current level of 42, some more losses were expected before reversing from the oversold level.
LTC threatened to break out of its parallel channel south – a development that could lead to another 10% sell-off. The indicators supported an unfavorable scenario and short sellers were expected to react to these bearish signals.
However, the 4 hour 200 SMA could be the answer to many market uncertainties. An immediate recovery would allow LTC to move back within the confines of a parallel channel.