Hi friends! I hope you are all doing well. Looking at the four hour chart for Litecoin, we can see that there has been a continuation in selling pressure, as the bulls have failed to regain the 50 EMA
(in orange.) After yesterday's selloff, which sent Litecoin all the way down to the 200 EMA
(in purple,) prices rose to test the bottom of the 50 EMA
, which acted as resistance, sending LTC back to the downside. Taking a closer look at yesterdays selloff and subsequent recovery, we can see that a large hammer candlestick
was formed, and that there was a volume
spike which was about two times the average volume
. Typically, this is indicative of capitulation or "panic selling," in the market. Capitulation selloffs often present value, and can generate trend reversals. However, that doesn't necessarily mean this is a valuable entry point. To be certain that a trend reversal has taken place, and that the selloff as run its course, we need to see evidence. Such evidence would include a sustained break above the 50 EMA
, and the pink dashed trendline
. Additionally, it would be a positive sign to see a bullish
cross on the MACD
, that confirms a shift in momentum. Until those things start to materialize, the sellers are still in control of this market for the short-term
. However, as long as a lower low isn't formed, the longer-term uptrend is still intact. We can see this by reviewing the higher highs and higher lows on the chart. On the downside, a sustained break below the 200 EMA
(in purple,) could send LTC tumbling to critical support around $200.
There is a lot of volitility in the crypto space right now. Be nimble. Have a price target. Have an exit strategy. Do your own research, and let the MagicPoopCannon be your guiding light!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***