Hi friends! In an attempt to give my lovely viewers a heads up on the potential dangers in this market, I would like to share this gloomy analysis with you. Let's look at Litecoin! As we can see on the four hour chart, LTC has rallied significantly off of yesterday's low. However, it was unable to maintain a breakout above the "critical resistance" level, and has since fallen back below. If you remember on my last LTC post, I told you that if Litecoin rallied up to the critical level, tested it and failed, that would be an very negative sign. Unfortunately, that appears to be exactly what is happening. Some of you may be wondering why this is such a negative development. Well allow me to clarify. As you can see on the chart, a low was made on December 30th, which was right on the 61.8% retracement
level. That essentially became the floor in the market. On January 16th, we broke through the floor (which was once support) and now we've rallied back up to test it (confirming it as new resistance.) In technical analysis
, this is called "confirmation." It is the cornerstone of exceptional chart reading. I believe in the power of confirmation so much, that I generally reject Elliot Wave
theory, because it lacks confirmation. However, I do believe that markets are fractal
, which is why I rely on Fibonacci sequences in my analyses. Anyway, I digress. Looking at the chart, we can see that LTC remains inside of the falling parallel channel
, which increases the likelihood of further downside. Technically, LTC is trapped between some important support and resistance
levels. Namely, the critical resistance level
and the pink trendline
. If LTC breaks that pink trendline
, selling pressure should accelerate, potentially sending LTC below yesterday's low. If LTC breaks above the critical resistance, it will have to immediately contend with the 50 EMA
(in orange,) the 200 EMA
(in purple,) and then the 50% retrace, at about $233. Since there is more overhead resistance than support underneath, the path of least resistance is still down.
This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media! Good luck trading everyone.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-MPC loves you-