Litecoin’s price has had a hard time in the fallout of China’s initial coin offering (ICO) ban.
While both bitcoin and litecoin took a hit after the early September statement from Chinese regulators – followed by domestic cryptocurrency exchanges voluntarily ceasing to offer services in the aftermath – bitcoin quickly recovered and neared record highs against the US dollar this week.
As litecoin support struggled, bitcoin seems to have benefitted from the rotation out of ether and ethereum-based tokens, triggered by fears of China-like ICO restrictions in other jurisdictions.
Against the U.S. dollar, litecoin is now down by more than $40 from its record high of $98.28, achieved on September 1. Further, the litecoin-bitcoin (LTC/BTC) exchange rate fell from 0.019 BTC (September 2 high) to 0.0098 BTC this week.
At press time, LTC/BTC is trading at 0.0105 BTC – down 0.9 percent on the day. Week-over-week, the pair is down 13.22 percent, while on a monthly basis, it is nursing a 34 percent loss.
However, price action analysis suggests that the LTC/BTC pair could be nearing a bottom.
The 4-hour chart shows that:
- The relative strength index (RSI) is rising from the oversold region.
- The falling trend line is seen offering resistance at 0.0115 BTC.
Daily chart: RSI oversold
The weekly chart shows that:
- Prices are currently hovering around the 61.8 percent Fibonacci retracement level of 0.01025 BTC, which acted as a strong support mechanism in May, June and August.
- Trading volumes have dropped significantly during the recent sell-off.
- The upward sloping 50-day moving average is seen offering support at 0.0098 BTC.
- The oversold conditions on the daily and 4-hour chart – which come at a time when prices are hovering around the critical 61.8% Fibonacci retracement support level – indicates the LTC/BTC pair could be nearing a bottom.
- The dips below 0.01025 BTC (61.8% Fibonacci retracement) are likely to be short-lived.
- The pair is more likely to rally to 0.012 and 0.0135 (200-day moving average) levels in the short run.
Image via Shutterstock
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First Appear on: Coin Desk