Litecoin (LTC)’s 37% November price rally is in danger of drying up as the “silver cryptocurrency” hints at the formation of a Double Best chart pattern.
The classic bearish reversal setup occurs when the price makes two consecutive tops of roughly the same height, with each upward move meeting with a sharp correction towards common support, known as “ neckline”.
Usually, price breaks below support and falls by the maximum height between the Double Prime top and the neckline.
So it appears, Litecoin is in the process of forming a Double Top pattern, as shown in the chart below.
Specifically, LTC price peaked on Nov. 10 near $295.50 – the first top – before correcting lower towards neckline support around $249. That was followed by a bounce to $280. la – second high, finally attracting profit participants caused a small correction, still in progress.
Litecoin will need to extend the sell-off to retest the neckline. Meanwhile, a break below the support will trigger a Double Major breakout setup, with a profit target near $200.
Bitcoin correlation
Litecoin’s bearish reversal pattern comes as inflation in the US surges to a three-decade high, prompting investors to seek hedges across various financial instruments.
For example, the most actively traded gold futures contract recently hit its best week in six months, rising 2.9% to $1,868.50 an ounce, after the US Department of Labor reported a price index. consumption (CPI) increased by 6.2% over the same period last year. -five. That marks the fifth straight month of inflation above 5%.
Many investors/traders have turned to Bitcoin after seeing it as a safety net against rising inflation, said Wilfred Daye, head of Securifying Cash, Securifying Inc.’s wealth management division. know, admit that people have chosen cryptocurrency as a hedge despite its concerns. price fluctuations.
“We don’t have a long enough history to say that Bitcoin is really an inflation hedge,” Daye said.
“I think gold is still a better hedge against inflation. But Bitcoin as a hedge against inflation is a sexy new concept – people love new ideas. “
Bitcoin’s growth has also given altcoins a boost thanks to its broader influence on the crypto market. Litecoin has been one of the beneficiaries of the rally, with its one-year performance correlation with Bitcoin standing at .71 above , according to data gathered from Crypto Observe.
As a result, concerns about persistently higher inflation have acted as a favorable windfall for earning Litecoin through Bitcoin. That could play a part in undermining the bearish Double Leading setup presented above – and validate a bullish pattern that has been in the works since late last week.
Litecoin “Bull Pennant” Set LTC Target at $350
Dubbed the Bull Pennant, the bullish continuation pattern occurs when prices consolidate sideways inside the Triangle structure after a strong upward move. Traders confirm a bullish breakout when the price breaks through the upper trendline of the Triangle on strong volume.
Related: Litecoin Hits 6-Month High As LTC Price Up 20% In 24 Hours
In doing so, they keep a length equal to the height of the previous uptrend (aka Flagpole) as their profit target. As a result, Litecoin price headed towards an extended uptrend towards $350, as shown by the setup in the chart below.
Meanwhile, risk-free following an unequivocal uptrend will trigger a Double Prime setup. That offers “multi-month ascending trendline support” as the next downside target if there is an accidental bearish breakdown, target also near $200.
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