Litecoin (LTC) Risks Another Brutal Downtrend If Bitcoin (BTC) Nosedives

Litecoin (LTC) Risks Another Brutal Downtrend If Bitcoin (BTC) Nosedives

Litecoin (LTC) is profiting off the relief rally in Bitcoin (BTC) at the moment. Although we can see on the 4H chart for LTC/BTC the pair has been the victim of a brutal downtrend since mid-2019, just when things are bad does not mean that they cannot get worse. This applies perfectly to the cryptocurrency market because most of these coins are paired to Bitcoin (BTC). If BTC/USD goes up, they go up and vice versa. The 200 moving average on the 4H chart for LTC/BTC is a very important resistance level to watch. Should the pair break above this level, we can expect a move towards the 66,8100 satoshi level near-term. 

However, a move like that would only serve to invalidate the descending triangle near-term which seems quite probable. Most of the time in the cryptocurrency market, we see moves that invalidate a known pattern because a lot of traders are betting on a certain outcome which creates a honey pot that the market makers and whales then target. For instance, most traders know from textbook technical analysis that descending triangle break to the downside. So, when they see a pattern like this, they go short. Unfortunately, there is a large number of people who do this and the market makers and the whales know in advance that they will. So, they end up doing the opposite of what most of these traders are thinking and end up liquidating their positions.

The 15 min chart for LTC/USD shows that the cryptocurrency is showing signs of bullishness near-term. If it breaks out of the falling wedge that we see on the 15 min time frame, we could see it make a run towards $46.87 in the near future. Similarly, the descending triangle on LTC/BTC could also break to the upside. However, it is important to realize that the descending triangle breaking to the upside is one thing but the price continuing to move up is another. 

One of the most devastating mistakes that most traders make in this market is that they confuse pumps or dumps for a trend. Until and unless there is follow through, that is not a trend; it’s a false signal. Similarly, a lot of traders bet on the unknown just because they want to squeeze the market for every last penny. That approach almost always leads to failure. There is no need to bet on a breakout before it happens. That small potential gain is not worth it when you think about the risks. This is why it is important to go with established trends. The trend in the case of Litecoin (LTC) remains bearish against both Bitcoin (BTC) and the US Dollar (USD). Until we have a bullish breakout with follow through, the trend is expect to continue to be bearish.

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