Litecoin (LTC) has emerged as one of many uncommon winners within the ongoing cryptocurrency market meltdown led by the FTX alternate’s collapse.
LTC worth outperforms BTC, ETH
The 2011-born altcoin rallied almost 16% month-to-date (MTD) to succeed in $62.75 on Nov. 22, outperforming its prime rivals, Bitcoin (BTC) and Ether (ETH), which misplaced roughly 25% and 30%, respectively, in the identical interval.
LTC/USD every day worth chart. Source: TradingView
Furthermore, the LTC/BTC worth additionally rallied to new heights, gaining 50% in November to ascertain a brand new yearly excessive of 0.003970 BTC on Nov. 22.
As Cointelegraph reported, Litecoin diverged from the broader cryptocurrency market downtrend earlier this month with its halving slated for August 2023. LTC has additionally obtained an endorsement from none apart from Michael Saylor for being a Bitcoin-like “digital commodity.”
Michael Saylor says #Litecoin can be possible a digital commodity like Bitcoin: pic.twitter.com/7N19IpxtSe
— Altcoin Daily (@AltcoinDailyio) November 18, 2022
Nonetheless, indicators of bullish exhaustion are rising.
Litecoin worth fractal hints at 50% correction
Litecoin’s rally versus Bitcoin has made the LTC/BTC pair overvalued, in keeping with its weekly relative power index (RSI) studying.
Notably, LTC/BTC’s weekly RSI, which measures the pair’s pace and alter of worth actions, surged above 70 on Nov. 22. An RSI studying above 70 is taken into account overbought, which many conventional analysts see as an indication of an impending bearish reversal.
Historically, Litecoin’s overbought RSI readings versus Bitcoin have been adopted by main worth corrections. For occasion, in April 2021, the LTC/BTC RSI’s climb above 70 met with a robust sell-off response, ultimately pushing the pair down by 75% to 0.001716 BTC by June 2022.
Similarly, an overbought RSI in April 2019 led to a 70% LTC/BTC worth correction by December 2019.
The similar RSI fractal now hints at Litecoin’s risk of present process a 50% wipeout versus Bitcoin if coupled with LTC/BTC’s multi-year descending channel sample, as proven beneath.
LTC/BTC weekly worth chart. Source: TradingView
Typically, LTC/BTC turns overbought after hitting the channel’s higher trendline, which follows up with a correction towards the decrease trendline.
As a outcome, the pair dangers dropping to or beneath 0.001797 BTC by December 2022 if the fractal repeats, down greater than 50% from the present worth ranges.
Conversely, a decisive breakout above the higher trendline might have LTC/BTC take a look at its 200-week exponential transferring common (200-week EMA; the blue wave) at 0.005319 BTC, up 30% from present worth ranges, as the following upside goal.
LTC/USD pair “bear flag”
Litecoin is eying the same worth crash versus the United States greenback because it paints a bear flag sample on the weekly charts.
Related: Cathie Wood’s ARK Invest provides extra Bitcoin publicity as GBTC, Coinbase inventory hit new lows
Bear flags are bearish continuation patterns that seem when the value consolidates greater inside a parallel, ascending channel vary after a robust transfer decrease (referred to as flagpole). They resolve after the value breaks beneath the decrease trendline and falls by as a lot because the flagpole’s top.
LTC/USD weekly worth chart. Source: TradingView
LTC has been buying and selling contained in the bear flag vary, eyeing a breakdown beneath its decrease trendline help of round $55. The bear flag draw back goal is round $32.40 if it breaks decisively beneath the stated help — i.e., a 50% decline by December 2022.
This article doesn’t include funding recommendation or suggestions. Every funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a call.