LTC price surpasses BTC, ET
Moreover, the price of LTC/BTC also rose to new highs, gaining 50% in November and setting a new yearly high of 0.003970 BTC on November 22nd.
Like Cointelegraph reportedLitecoin has bucked the broader downtrend in the cryptocurrency market earlier this month with its halving to August 2023. LTC also received approval by none other than Michael Saylor for being a “Bitcoin-like digital commodity”.
— Altcoin Daily (@AltcoinDailyio) November 18, 2022
However, signs of bullish exhaustion are emerging.
Litecoin price fractal suggests a 50% correction
Litecoin’s rally against Bitcoin has made the LTC/BTC pair overvalued, according to its weekly Relative Strength Index (RSI).
Notably, the LTC/BTC weekly RSI, which measures the pair’s speed and change in price movements, jumped above 70 on November 22. An RSI above 70 is considered overbought, which many mainstream analysts see as a sign of an impending bearish reversal.
Historically, overbought RSI readings against Bitcoin Litecoin have been followed by large price corrections. For example, in April 2021, the LTC/BTC RSI’s rise above 70 was met with a strong selling reaction that eventually pushed the pair down 75% to 0.001716 BTC by June 2022.
Similarly, the overbought RSI in April 2019 led to a 70% correction in the LTC/BTC price by December 2019.
The same RSI fractal now suggests the possibility of Litecoin undergoing a 50% wipeout against Bitcoin if coupled with the multi-year descending LTC/BTC channel pattern as shown below.
TypicalLTC/BTC overbought after hitting the upper trendline of the channel, followed by a correction towards the lower trendline.
As a result, the pair risks a drop to or below 0.001797 BTC by December 2022 if the fractal repeats, down more than 50% from current price levels.
Conversely, a decisive break above the upper trendline could see LTC/BTC test its 200-week exponential moving average (200-week EMA; blue wave) at 0.005319 BTC, a 30% increase from current price levels, as another bullish target .
LTC/USD Pair “Bear Flag”
Litecoin is tracking a similar price drop against the US dollar as it paints a bearish flag pattern on the weekly charts.
Bearish flags are bearish continuation patterns that occur when price consolidates higher in a parallel, ascending channel range after a strong move lower (called a pole). It resolves after the price breaks below the lower trend line and falls as much as the height of the pole.
LTC is trading in a bearish flag range, tracking a dip below its lower trendline support around $55. The bearish flag’s downside target is around $32.40 if it definitely breaks below the mentioned support.
In other words, a 50% drop by December 2022.
This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.