Often considered Bitcoin’s little brother, Litecoin was originally conceived as a peer to peer cryptocurrency to serve a similar purpose as Bitcoin. It was launched in 2011 by Charlie Lee with the goal of making a lighter version of Bitcoin meant for daily transactions.
Litecoin uses a similar proof of work algorithm called Sycrpt. Being a decentralized, peer to peer network for payments it goes by the name of its coin LTC. Blockchain has been dispersing the power of validating a transaction among the users of the cryptocurrency network, popularly known as miners. Miners are rewarded for their service in the newly formed LTC along with some transaction fees for their efforts.
Of course, all these things were already introduced by Bitcoin but what is new in Litecoin and LTC. Well, given its emphasis on developing a lighter version of Bitcoin, Litecoin offers faster and cheaper transactions with more decentralization. LTC is still under the observant eyes of developers with the most recent update being added on June 11, 2020. You can easily understand the capability of Litecoin by simply comparing the block processing time of 2.5 minutes. It is four times smaller than that of Bitcoin, which takes 10 minutes to solve a block.
Technical Analysis of Litecoin
Let us first begin with a broader understanding of the price action, support, and resistances affecting the momentum of LTC. This coin has been among one of the most stable coins, but the profit booking after the fall in May 2021 has broken its 200 Day Moving Average on multiple instances. It is not a good zone for long term holders of this cryptocurrency.
However, traders can consider the fact that prices bounced from the 200 moving average every time it was broken as a sign of positive buying. On the daily chart, we can witness only one support but multiple resistances on its way to its previous high of $400. There is also a significant dip in volumes as compared to a week prior. This indicates that traders and investors are holding Litecoin at lower levels.
A lower supply in the open market can surely be beneficial for traders as it can move the prices up. The first resistance to look out for is placed at synchronous to the 100 days moving average and the second resistance at around the $300 mark. Since the LTC is trading close to the support line and 200 Day Moving Average, one can buy it at these levels in the hope of a bull run.
MACD is indicating a golden crossover, and it just needs some volume at these levels to lift the prices. LTC can easily cross the $230 mark if backed by a buying spree.
The Heikin Ashi chart needs no introduction and can be used without any other indications to accurately predict the possible momentum of the underlying asset. While all the other indicators are portraying chances of a bull run, it is still unable to give a clear buying candle, and wicks on both sides damage the positive sentiment.
RSI, on the other hand, is at neutral levels of close to 40. If one intends to make an entry at current levels, we suggest holding only as long as the price maintains the strategic $150 mark.
Hourly Heiken Ashi chart pattern portrays and builds upon the negative sentiment added by the daily charts. Even though other indicators are supporting a positive move, LTC is more inclined to dip towards $175 to $170 before making a run towards the $205 levels. RSI also supports this narrative, as it is showing a negative turn from close to overbought zones towards the neutral zones.
Without a clear breakout investing or trading in LTC can be less fruitful. But once it breaks the resistance placed at $205, it will move ahead to retest the long-term resistance of $227.