Litecoin, often abbreviated as LTC, has recently experienced a notable upturn, propelling the digital currency above its trendline resistance and positioning it within a potential breakout zone as per market analysis.
At the time of this composition, LTC was trading at approximately $88, registering a growth of more than 2% within the last 24-hour trading period. The crucial query that arises is whether the current upward momentum will be sustained by buyers, propelling LTC towards higher resistance levels, or if a short-term setback is on the horizon?
LTC Surpasses EMAs Indicating Robust Buying Activity
Over the preceding three months, Litecoin has been trading within an upward channel pattern. Recent developments have seen LTC break out of this pattern amidst substantial buying interest. Notably, LTC has closed above significant moving averages including the 20-day, 50-day, and 200-day EMAs, signaling a strong bullish sentiment in the market.
This week, the altcoin has made multiple attempts to breach a critical resistance band situated in the $89-$93 range.
If the bulls successfully trigger a decisive breakout above $93, Litecoin could potentially surge towards the next notable resistance levels between $100 and $104. Conversely, a failure to breach this resistance may prompt a retracement towards support levels around $76, possibly dipping lower to around $72. These levels correlate with the immediate EMAs and the nearby trendline support (indicated by a white dashed line).
The Relative Strength Index (RSI) hints at a moderation in buying pressure, having retraced from overbought territories and dipped below its moving average. Failure to surpass the RSI-based moving average might result in a slower pace of movement on the price charts.
Insights from LTC Derivatives Data
An exploration of derivatives data reveals a somewhat optimistic outlook for LTC. Trading volumes have noticeably surged by 76.14% to reach $1.14 billion, indicating heightened trader participation in response to the price uptrend.
Moreover, there has been a slight uptick in open interest, implying that traders are gearing up for a potentially significant market shift, be it a breakout scenario or a continuation of the prevailing trend.
While the long/short ratio stands at a nearly balanced level of 0.9414, platforms such as Binance and OKX reflect a slightly more bullish inclination among traders, with top market participants anticipating a price upsurge.
It is imperative to factor in the broader market dynamics, especially the movements of Bitcoin, as they exert substantial influence on alternative cryptocurrencies like Litecoin. A favorable performance by Bitcoin could act as a catalyst for Litecoin to overcome the $93 resistance threshold and aim for higher price levels.