The Litecoin (LTC) price suffered a sharp sell-off last week and lost an important Fib support level.
Unless the price manages to reclaim it quickly, more downside is expected for the Litecoin price.
Litecoin Price Shows Bearish Signs at Resistance
The price of LTC has risen since June 2022 and reached a yearly high of $105.70 in Feb. However, the price was unable to surpass the horizontal resistance area of $100 and was rejected twice.
This is considered a negative signal. This rejection resulted in a double top, which is a bearish pattern where the price is turned down twice from the same area, leading to a significant decline.
Additionally, the last rejection resulted in a bearish engulfing candlestick. This is a type of candlestick pattern that signals a bearish trend reversal.
This pattern occurs when the entire previous period’s gain is wiped out, and it is confirmed when the current period’s close is below the previous period’s opening. In the case of LTC, this did happen.
Next, the Relative Strength Index (RSI) indicator supports the continuation of the decrease. By using the RSI as a momentum indicator, traders can determine whether a market is overbought or oversold and decide whether to accumulate or sell an asset.
During the double top, the LTC price and the RSI generated a bearish divergence. A bearish divergence is an occurrence in which an increase in momentum does not accompany a price increase.
LTC Price Prediction: Is More Downside Expected?
The technical analysis from the daily time frame supports the possibility of more downside for the future price. The main reason for this is the loss of the 0.382 Fib retracement support level and its validation as resistance.
The theory of Fibonacci retracement levels suggests that after a substantial price move in one direction, the price will partially retrace or return to a prior price level before continuing in its original direction. This principle can be used to determine the peak of potential future upward movements.
After decreasing below the 0.382 Fib level at $89, the LTC price is in the process of validating it as resistance (red icon). If successful, this will likely lead to a drop to the 0.618 Fib at $80.
Considering all the indicators above, a continued downward trend would see LTC likely finding support at a long-term ascending support line at $74. However, if the price gains momentum and breaks through the resistance level, it could potentially increase to a 12-month high of $130.
Despite this bearish LTC price analysis, a close above the $89 area will mean that the trend is not bearish. Therefore, the price could increase to the long-term resistance of $100 again.
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