Litecoin grapples with ‘double top’ dangers after LTC worth rallies 37% in November
A 37% November worth rally in Litecoin (LTC) dangers exhaustion because the “silver cryptocurrency” hints at forming a double high chart sample.
The traditional bearish reversal setup seems when the worth varieties two consecutive peaks of virtually the identical peak, with every upside transfer assembly with a robust correction towards a standard assist stage, known as the “neckline.”
Typically, the worth breaks under the assist and falls by as a lot as the utmost peak between the double high’s peak and neckline.
So it seems, Litecoin is midway by forming a double high sample, as proven within the chart under.
In element, LTC’s worth peaked out on Nov. 10 close to $295.50 — the primary high — earlier than correcting decrease towards the neckline assist of round $249. That adopted up with a rebound to $280 — the second high — finally attracting profit-takers to trigger a minor correction, which continues to be underway.
Litecoin would wish to increase its selloff to retest the neckline. Meanwhile, breaking under the assist stage would activate the double high breakout setup, with the revenue goal sitting close to $200.
The Bitcoin correlation
Litecoin’s bearish reversal sample is rising when inflation within the United States has surged to a three-decade excessive, prompting traders to hunt a hedge throughout numerous monetary devices.
For occasion, probably the most actively traded gold futures these days posted to its finest week in six months, leaping 2.9% to $1,868.50 per troy ounce, after the U.S. Labor Department reported a rise within the shopper worth index (CPI) by 6.2% year-over-year. That marked the fifth-straight month of inflation above 5%.
Many traders and/or merchants turned to Bitcoin (BTC) after perceiving it as a security web towards rising inflation, famous Wilfred Daye, head of Securitize Capital — the asset-management arm of Securitize Inc — admitting that individuals have picked the cryptocurrency as a hedge regardless of its regarding worth volatility.
“We don’t have long enough history to assert Bitcoin is indeed an inflation hedge,” Daye stated, including:
“I would argue that gold is a better inflation hedge still. But Bitcoin as an inflation hedge is a new sexy concept — people love new ideas.”
Bitcoin’s progress has additionally helped altcoins rise in tandem due to its broader affect throughout the crypto market. Litecoin has been one of many beneficiaries of the rally, with its one-year correlation effectivity with Bitcoin standing at 0.71 above zero, per information collected from Cryptowatch.
As a end result, considerations over persistently increased inflation have acted as a tailwind for Litecoin positive aspects by Bitcoin. That may considerably play spoilers for the bearish double high setup offered above — and validate a bullish sample that has been lively since final weekend.
Litecoin “bull pennant” places LTC goal at $350
Dubbed a bull pennant, the bullish continuation sample seems when the worth consolidates sideways inside a triangular construction after a robust rally upward. Traders affirm a bullish breakout when the worth breaks above the triangle’s higher trendline with sturdy volumes.
Related: Litecoin hits 6-month excessive as LTC worth soars 20% in 24 hours
In doing so, they eye the extent at size equal to the peak of the earlier uptrend (aka flagpole) as their revenue goal. As a end result, Litecoin’s worth eyes an prolonged upside transfer towards $350, as proven by way of the setup within the chart under.
Meanwhile, failing to have a decisively bullish follow-through dangers activating the double high setup. That brings the “multi-month ascending trendline support” within the image as the subsequent draw back goal ought to there be a bearish breakdown transfer; coincidentally, the goal can also be close to $200.
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