Litecoin fell a bit on Friday only to turn around and show signs of support. The market looks as if it is trying to form a bit of a hammer, which of course is a supportive-looking candlestick. Nonetheless, it is worth noting that the market continues to see sellers every time we rally, and Litecoin continues to show signs of downward momentum.
Furthermore, larger crypto markets are failing such as Bitcoin and Ethereum, and as long as that is going to be the case, it is very likely that these other crypto assets will continue to fall. The market breaking down below the bottom on the hammer could kick this market down to lower levels, perhaps down to the $80 level. We have been in a downtrend for quite some time, and I just do not see that changing anytime soon.
That being said, if we do rally from here, I think there are going to be a couple of areas that we need to pay close attention to. The $100 level would be the first barrier that we need to overcome, but if we can break above there then we will go looking towards the $106 level, an area where we have seen resistance earlier this week. Breaking above that opens up the possibility of a move to the 50-day EMA, currently sitting at the $111.65 level and falling.
It is not until we break above all of those areas that I would consider going long of Litecoin, because it continues to look very vulnerable, and it is worth noting that each successive high has gone lower, the very epitome of a downtrend. The question now is whether or not we are going to kick-off to the downside, essentially cementing the idea of a descending triangle. If we do, I anticipate that Litecoin will go much lower, perhaps down to the $75 level, maybe even lower than that.
If we see Bitcoin and Ethereum start to sell off, then the rest of these markets will continue to fall as well. After all, altcoin markets tend to be highly sensitive to the overall risk profile of traders, with crypto being far out of the spectrum, and the smaller markets are on the very end of the risk appetite spectrum.
