Litecoin (LTC) could surge another 20% amid a rare burst of trend reversal that has already seen LTC outperform most crypto assets over the past few days.
LTC’s not-so-bearish symmetrical triangle
LTC price broke out of what previously looked like a bearish symmetrical triangle.
Symmetrical triangles are trend continuation patterns, meaning that a break out of their range typically causes the price to move in the direction of their previous trend.
Litecoin formed a symmetrical triangle pattern between May and November after falling 70% to nearly $40 in the previous trading sessions. Ideally, the LTC/USD pair could have resolved the pattern by breaching its lower trendline.
Instead, it broke above the upper trend line in early November as shown below. According to Edwards and Magee, the authors of Technical Analysis of Stock Trend, the breakout move is rare, with only 25% of historical symmetrical triangle breakouts resulting in trend reversals.
LTC/USD three day price chart. Source: TradingView
Litecoin firmly followed its symmetrical triangle reversal move and now sees a rise towards $100 or another 20% by December 2022.
This upside target is measured after calculating the distance between the upper and lower trend lines of the triangle and adding the output to the breakout point (around $58 in the case of Litecoin).
Why has Litecoin price increased?
Litecoin’s symmetrical triangle move began in late October. It coincided with MoneyGram’s announcement that it would allow users to buy, store and use LTC alongside Bitcoin (BTC) and Ether (ETH) for payments.
LTC/USD three day price chart. Source: TradingView
The LTC breakout lost momentum due to the FTX collapse in the first week of November and its negative impact on the broader crypto market. But Litecoin resumed its uptrend amid speculation of its reward halving in the summer of 2023.
Also Read: Litecoin Hits New 2022 High Against Bitcoin – But Will LTC Price “Halve” Ahead of Halving?
“Litecoin tends to rally in the months leading up to the halving,” noted market analyst The Digital Trend in its commentary on SeekingAlpha, adding:
“The price then tends to stabilize before entering a longer and more substantial bull market. Then, around mid-cycle, Litecoin enters a downside/distribution phase like Bitcoin.”
LTC/USD price history before and after the halving. Source: TradingView/The Digital Trend
Litecoin’s price could reach $180 by July 2023 if the halving fractal plays out as intended, as Cointelegraph reported here.
The bearish attitude
Conversely, Litecoin may experience a short-term correction as its three-day Relative Strength Index (RSI) becomes “overbought.” The trigger for the move down could be the RSI crossing above 70 from its current level of 68 as shown below.
LTC/USD three day price chart. Source: TradingView
LTC’s downside target in the event of a corrective trend is around $40, which is around 50% below the current price level.
This article does not contain any investment advice or recommendation. Every investment and trading move involves risk and readers should do their own research when making a decision.
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