Litecoin pulled back just a bit on Friday as we continue to move back and forth around the $125 level. Furthermore, we are sitting on top of the 50-day EMA, which is an area that people pay close attention to for support and resistance. As you can see, the market previously had found the 50-day EMA resistance, so now it looks as if it is trying to find it as support.
Litecoin could rally based upon what I am seeing over in the Bitcoin market, as it tends the lead the rest of the crypto markets higher or lower. We are on the precipice of a breakout over there, so that could bring in more excitement over here. If we get that move to the upside in Bitcoin, it could very well drive Litecoin to reach towards the $140 level. The 200-day EMA sits at the $150 level. That would be a significant barrier to overcome, so I would be a bit surprised to see Litecoin take that out.
On the downside, if we break down below the 50-day EMA, it is likely that the market goes looking towards the $120 level, possibly even the $115 level. The candlestick on Friday was the first negative one in five or six, so that does suggest that there is a certain amount of bullish pressure that is trying to break out. However, the $125 level is an area that has been important more than once, so to think that we would just slice through it with no real effort is probably a bit of a stretch.
If we do though, that would obviously be a very bullish sign. Anticipate that this is a market that is going to continue to be very choppy, but it does seem as if it will at least make an effort to try to break out. That is probably the best way to describe crypto on the whole right now, so a little bit of restraint when it comes to position size will probably go a long way. Once we do get a confirmed breakout, you always have plenty of time to add to an existing small position. Ultimately, this is a market that is trying to build a larger base from this “W pattern.”
