Litecoin rallied a bit on Wednesday to reach towards the 50-day EMA. This is where we pulled back from during the Tuesday session, and the fact that we are retesting it is a good sign. However, crypto markets will be holding their breaths and waiting for the CPI numbers coming out of the United States, as it could give us an idea as to what the central bank will do and whether or not the Federal Reserve will have to fight inflation. If they do, risk appetite will probably be crushed, due to the fact that the interest rates will rise, and people will be more apt to take the safe way out.
Keep in mind that although Litecoin has had a couple of really good days, the reality is that we are still technically in a downtrend. In fact, I do not know that I would be bullish until we break above the $150 level, but you could “front run the move” if we get Bitcoin rallying rather significantly. After all, crypto is very sensitive to risk appetite, and beyond that, Bitcoin is the leader. Quite frankly, if Bitcoin falls apart, most coins will struggle to continue rallying.
The market might be a bit quiet until 10:00 AM New York time, when the CPI figures come out. That being said, keep in mind that Litecoin has had a significant bounce that might get sold into, due to the fact that the market could be thought of as being slightly overbought. However, if we break above the $150 level, then it is more or less a “buy-and-hold” type of situation, right along with the Bitcoin market, and the Ethereum market as well.
Pay close attention to the US dollar, as most crypto traders forget that this is essentially the same thing as a currency pair, only one of the currencies is a digital currency. If the US dollar starts to strengthen, that will work against the value of this pair, driving the price of Litecoin down towards the $125 level. A breakdown below that level could very well send this market down towards the $100 level after that. Anything below $100 level would be catastrophic at this point in time.
