Hi Traders! Litecoin short term forecast update and follow up is here. On December 21st, 2023 I shared this “Litecoin Technical Analysis And Short Term Forecast” post in our blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H4 chart, based on the Heikin Ashi candles we can see that currently, we have strong bearish bodies in downward-moving market conditions so it basically reflects a bearish environment. In addition to this, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, and lower lows which we may consider as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then a further continuation lower. Currently, it looks like a correction is happening. Also, we had a strong support zone that has formed and the price which is moving lower has broken below this zone and is holding below it, we may consider this as yet another evidence of bearish pressure. Currently, this strong support zone is acting as a strong resistance zone for us. Until this strong resistance zone (marked in red) shown in the image below holds my short term view remains bearish here and I expect the price to move lower further after pullbacks.
Based on the above mentioned analysis my short term view was bearish in Litecoin and I was expecting the price to move lower further after pullbacks until the strong resistance zone holds. The price action followed my analysis exactly as I expected it to here. After the bearish trend pattern, we had a deeper pullback here with the price reaching the strong resistance zone again and bounced lower from this zone. The price then moved lower further as I expected it to and delivered an extraordinary move to downside as you can see in the image below!
On the H1 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high that has formed at 77.40 and the second high that has formed at 77.60 based on the MACD indicator, which we may consider as evidence of bearish pressure. The price then moved lower and broke below the most recent uptrend line. We may consider these as facts provided by the market supporting the bearish view and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further and provided an extraordinary move to the downside!
As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
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