Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Litecoin has a bullish bias on the four-hour price chart
- The lack of buying pressure meant LTC longs had to tread carefully
Litecoin [LTC] has been trading within a certain range since the second half of August. Despite recent bullish conditions, LTC was unable to break through a higher timeframe resistance zone. The high positive correlation with Bitcoin [BTC] suggested that the coin has plenty of room to move higher.
Read Litecoins [LTC] Price forecast 2023-24
A recent report from AMBCrypto noted that LTC could rise to $65 before a bearish reversal occurs. This didn’t happen because of the massive BTC rally, but the marked resistance zone up to $74 remained unbeaten.
The range high is now a support level, but bulls should temper enthusiasm with caution
Source: LTC/USDT on TradingView
Many altcoins saw double-digit percentage gains and heavy buying pressure this week. Litecoin was one of them, but the demand for the coin was suspicious. Admittedly, the OBV has been in a steady uptrend this past week.
The market structure in the fourth half was bullish and the Relative Strength Index (RSI) was above 50, reflecting an uptrend and bullish momentum. Still, there were some signs of weakness in the market. To start, LTC saw a sharp rejection at the USD 72.89 level and fell south to USD 67.07. It was an 8% decline, but the Fibonacci retracement levels indicated that bulls have nothing to worry about yet.
The daily bearish breaker block (red box) that reached as high as $74 did not see a trading session close to it. Until then, long-term bulls might justify their doubts.
The spot CVD is a major contributor to the bearish ideas highlighted above
Source: Coinalyse
Coinalyze data indicated strong bullish sentiment as Open Interest (OI) and prices rose from October 21 to October 24. The pullback caused OI to drop, which was not a concern as it is normal for the market to go up and down.
What is abnormal is the strong downward trend on the ground of the Cumulative Volume Delta (CVD) over the past week. This meant that the recent move to $73 was driven by the futures market and not the spot market, meaning a reversal was likely.
Source: Hyblok
Hyblock data showed a positive cumulative Liq Levels Delta. The recent pullback from $72 saw some long positions liquidated, causing this Delta to fall. The liquidation levels chart showed that short positions worth millions of dollars could be liquidated in the $70-$72.15 zone.
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Therefore, we could take another move towards $73 to hunt these short positions before a reversal occurs. The expectation of a reversal stems from the downward trend in CVD locally. On the other hand, a BTC move above $36,000 could allow the LTC to rally alongside it.