- Litecoin has a bearish short-term and medium-term trading bias
- The four-hour time frame shows that a bullish inverted head and shoulders pattern may be forming
- The daily time frame shows that a bullish falling wedge pattern has formed
Litecoin is consolidating around the $40.00 level as it attempts to recover from a ten-month trading low.
The LTC/USD pair is trading down by around 14 percent since the start of December, although the cryptocurrency still trades in the green by around 25 percent since the beginning of 2019.
Technical analysis suggests that if the LTC/USD pair could stage a major upside rally if bulls can start to gain traction above the $45.00 to $50.00 technical region.
The four-hour time frame shows a possible inverted head and shoulders pattern in the making, with bulls needing rally the LTC/USD pair towards the $45.00 level to help form the reversal pattern.
The size of the pattern suggests that LTC/USD could rally to $70.00 if bulls gain traction above the $45.00 level.
Looking at the daily time frame, a falling wedge pattern is present, which also highlights that the LTC/USD pair could soon break to the upside.
The top of the wedge pattern is currently located around the $50.00 level and highlights the $78.00 level as a possible upside target of a bullish breakout occurs.
Traders should also be aware that failure to defend the $36.00 level could lead to an even deeper decline back towards the bottom of the falling wedge pattern on the daily time frame, around the $33.00 level.
Overall, traders may await further technical confirmation before initiating LTC/USD buy positions. A rally towards the $50.00 level should confirm that a price floor is finally in place.
The four-hour time frame shows that key technical resistance is now located at the $45.00 and $50.00 levels.
Key technical resistance over the medium-term is located at the $70.00 and $78.00 levels.
The four-hour time frame is showing that the LTC/USD pair has strong long-term technical support around the $38.00 and $36.00 levels.
A reversal from current levels and sustained weakness under the $33.00 level will leave the LTC/USD pair exposed to additional losses.
Short-term bulls need to rally the LTC/USD pair towards the $45.00 level in order to form a bullish reversal pattern.
If Litecoin start to stabilize above the $50.00 level, a powerful bullish rally towards the $70.00 to $78.00 may follow.