Litecoin (LTC) price is in the process of validating the resistance line from which it broke. The trend can be considered bullish if the price does not close below $79.
Litecoin price had been rising since the beginning of May 2021 inside an ascending parallel channel. While such channels usually result in corrective movements, LTC price managed to break out on Jan 11, 2022. This is usually a sign that the upward movement is impulsive.
Besides, the daily RSI broke out of its bearish divergence trend line and is now trending upward.
Currently, Litecoin is in the process of validating the resistance line of the price channel as support (green icon). If it succeeds, the next resistance lies at $130. On the other hand, a break below the resistance line of the channel would indicate that the breakout was not valid and new lows will follow.
Litecoin price could retest the $79 support
The six-hour chart shows that LTC price has followed an ascending support line since 9 November. It validated the line on December 29 (green icon) and subsequently accelerated its rate of rise. Furthermore, it shows that Litecoin broke out of the $79 resistance area.
Despite the gains, the six-hours RSI is showing signs of weakness in the form of a bearish divergence (green line). As a result, it could move back to retest the $79 area as a support. The area will soon intersect with the ascending support line.
Due to this confluence, the price trend of Litecoin remains bullish until it closes below the confluence with the $79 support level.
LTC/BTC forms bearish pattern
While the LTC/USD pair is looking bullish, the same cannot be said about LTC/BTC. The price has formed a double top, which is considered a bearish pattern. Furthermore, the pattern has been aligned with the bearish divergence in the RSI (green line).
Consequently, a downside movement towards the ₿0.0038 or ₿0.0034 support is the most likely scenario.
A move above the second top high of ₿0.0047 will invalidate this bearish price assumption.
To conclude, the LTC/USD price action is bullish until the price closes below $79. On the other hand, LTC/BTC price is expected to decline due to the formation of a bearish pattern.
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