Litecoin (LTC) Price Outlook:
- Litecoin is down roughly 15% from Friday and trades near $90 for the first time since May
- Support around $84.50 has provided some buoyancy for the time being
- LTCUSD sold off alongside Bitcoin which is now in oversold territory according to one technical indicator
Litecoin (LTC) Price Falters Alongside BTC, Slips to 2-Month Low
The price of Litecoin dropped approximately 15% over the weekend as a widespread cryptocurrency selloff took shape. The crypto world was thrust into mainstream headlines after President Trump tweeted he was “not a fan of Bitcoin or other cryptocurrencies.” Similarly, Facebook’s Libra cryptocurrency continues to face regulatory scrutiny, but some crypto believers stand steadfast as they adhere to the “no publicity is bad publicity” approach. Either way, Litecoin remains firmly within positive territory – boasting a 180% return in the year-to-date.
Litecoin Price Chart: Daily Time Frame (March - July) (Chart 1)
In the near-term however, the situation appears direr as LTCUSD looks to hold above support around $84.50. The level marks Litecoin’s lows in mid to late-May and has held influence over price in the past. Should horizontal support be proven insufficient, the coin will look to test the 200-day moving average – currently residing at $75. A break beneath the latter level could accelerate losses as bullish sentiment is called into question.
On the other hand, topside resistance appears somewhat sparse. Aside from the $100 psychological level, subsequent resistance resides around $116 with the 23.6% Fibonacci retracement. But while the road higher appears to be the path of least resistance, proximity to critical support – namely the 200-day moving average – is concerning. As price action unfolds, follow @PeterHanksFX on Twitter for updates and analysis in the cryptocurrency space.
That said, cryptocurrency may remain in the headlines for the time being with Facebook’s David Marcus – head of Calibra – set to testify before Congress on Monday regarding Libra’s adoption and regulatory policy. Despite the scrutiny, IG clients remain overwhelmingly bullish on all cryptocurrencies with almost 93% of traders net-long Litecoin.
Retail trader data shows 92.8% of traders are net-long with the ratio of traders long to short at 12.84 to 1. The number of traders net-long is 5.3% lower than yesterday and 9.4% lower from last week, while the number of traders net-short is unchanged than yesterday and 24.2% lower from last week. While IG client sentiment data is typically used as a contrarian indicator, traders are rarely net-short digital assets – similar to client positioning on gold. To learn more about this phenomenon and why it occurs, sign up for my IG Client Sentiment Walkthrough Webinar.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX