LTC prices may fall alongside riskier assets.
After bottoming out near $40.50 in June 2022, Litecoin has surged 130% to nearly $100. The main reasons include improving overall risk appetite and euphoria for the upcoming Litecoin halving event in August 2023.
However, technicals suggest LTC could wipe out most of those gains in the coming months.
LTC Price Draws Huge Bearish Flag
Litecoin Adjusts Gains Mainly Due To Huge Bearish Flag On Weekly Chart.
A “bearish flag” is a bearish continuation pattern that occurs when prices correct within an ascending parallel channel after a strong downtrend. It resolves after the price breaks below the lower trendline as trading volume increases.
Litecoin has followed a similar pattern since early June 2022. Previously, the LTC/USD pair saw a 70% price correction from $130 to $40.50. So, from a technical point of view, if that price breaks below the lower trendline, the downtrend will continue.
A bearish flag’s breakdown move usually lowers the price by the length of the previous downtrend. Applying the same settings to Litecoin, the bearish flag’s lower target would be almost $30.50, or 65% below his current LTC price.
Litecoin Price “Head Fake”?
As previously mentioned, Litecoin’s price rise was largely in line with similar movements in risk markets due to subdued inflation.
For example, between October 2022 and January 2023, the Nasdaq 100 Stock Market Index is up about 15.50. Similarly, Bitcoin is up more than 50% from its November 2022 bottom of around $15,500.
The weekly correlation coefficient between Litecoin and the Nasdaq 100 was almost positive at 0.35 on Jan. 1. 27. Similarly, the correlation between Litecoin and Bitcoin is currently around 0.21.
But UBS Global Wealth Management Chief Investment Officer Mark Höfele, like many other analysts, said the ongoing rise in risk could be a ‘head fake’. doing. Simply put, the ongoing litecoin rally could be short-lived under the influence of its risk-taking counterparts.
Crypto Independent Market Analyst Kapo agreed, stating:
“The way the upward movement is happening, the way [higher-timeframe] resistances are being tested… it looks manipulated, no real demand. Once again, the biggest bull trap I’ve ever seen.”