Litecoin: Short Signal Active.

Litecoin is poised to test the low 60's over the coming week. My trade scanner has called a signal to go short from 64.90 with a stop at 66.25 and take profit at 62.90 approximately. This was shared yesterday around 6:30 PM EDT. These signals are private but I am sharing it here so that as a community we can evaluate the context and observe the outcome.

Having a tool like this makes it a LOT easier to compete in a highly random environment. Since it generates the signals for the same exact reasons every time, it removes a great amount of indecision and confusion on your part. You can focus more on the bigger picture like managing the trade.

So let's evaluate the context, and see if this signal is sensible. By the way, all you need to properly evaluate context are horizontal lines, and the ability to highlight price patterns by drawing squares, etc. If you are consuming charts polluted with colors, oscillators, cartoons, etc., you are being entertained, NOT properly informed. It's like eating pizza with vegetables on it and thinking it's "healthier" for you.

First is the broader trend. Is it bullish or bearish? Based on this chart, going back a number of months, the broader structure is bearish (lower highs, lower lows). As long as this structure stays intact, it is reasonable to expect resistances to hold and support to break.

The scanner signal is clearly in line with the broader trend. An advanced trader can use this fact to justify moving the take profit to an even lower price like 60 or maybe high 50's. Why? A lower low has a greater probability and that translates into greater profit potential.

Second, lets look at levels. Notice the two lower highs in recent weeks (blue arrows). They highlight the 70 whole number resistance area. If the trend is going to stay bearish, price should NOT compromise this resistance. Knowing this should help prevent you from getting long too soon, and from over reacting to any temporary noise (like a quick short squeeze).

One other consideration is inter market relationships: Bitcoin and economic environment. It is not necessary to look this far when it comes to short term momentum trades, but it certainly doesn't hurt. Bitcoin is the leader, not Litecoin. As long as Bitcoin continues to maintain a bearish bias, Litecoin is likely to follow. And on top of that, interest rates are pushing new highs. NOT a favorable sign for speculative assets like Bitcoin and alt coins.

Add all this up and the Litecoin short idea is sensible. This is what bolsters confidence when considering such trades. Being able to focus on these bigger picture elements is where the educational value is, not chartoons.

Some form of automation within your trade effort can change your outcome significantly especially for beginners. Worry less about getting the setup right and focus more on managing the outcome.

Thank you for considering my analysis and perspective. And if you liked this article, please let me know by pressing the boost button!