Litecoin (LTC) recently encountered substantial downward pressure following a sharp rejection from its 200-day EMA resistance level. The cryptocurrency has retraced towards a critical support area, with attempts to recover and potentially retest higher resistance levels.
At the time of writing, LTC was trading at $62.86, showing a decline of close to 1.5% over the last 24 hours.
Can the Bulls Recover Lost Territory Post Recent Downtrend?
LTC experienced a reversal from its $71 resistance level (200-day EMA), resulting in a pullback towards its current levels around the pivotal support at $62. This price level hovers near the intersection of horizontal support and a trendline, marking a crucial juncture for LTC’s short-term direction.
It is important to highlight that the 20-day and 50-day EMAs are trending downwards. Should this pattern continue and the 20-day EMA crosses below the 50-day EMA, it could signify increased selling pressure. In such a scenario, the next significant support level for LTC would be in the range of $55 to $60.
The Relative Strength Index (RSI) is hovering around 42, indicating a somewhat bearish sentiment. Although the RSI is not in oversold territory, the recent pullback suggests that there might still be room for selling momentum before a bullish resurgence.
The MACD also confirms the bearish trend, as both the MACD and Signal lines are pointing downwards following a bearish crossover. A drop below the 0-mark could expose LTC to further losses in the short term.
Bulls will need to defend the $62-$63 range to prevent further decline towards $55. However, if overall market sentiment favors the bulls, a brief uptrend targeting the $68-$70 resistance level could be witnessed.
Interesting Insights from Derivatives Data
The trading volume has decreased by 36.22% in the previous day, indicating reduced trading activity, which may reflect high uncertainty among traders. Concurrently, a slight 1.31% decline in Open Interest during this period suggests a cautious approach among traders.
The overall long/short position stands at 0.9608, suggesting a marginal bearish bias. However, the ratio on Binance demonstrates a strong bullish sentiment at 2.4106, indicating traders’ optimism for a short-term recovery. Nevertheless, the slight inclination towards short positions hints at the possibility of further downside before a significant rebound.
Traders are advised to closely monitor EMAs, RSI, and general market sentiment prior to making any trading decisions involving Litecoin.