The cryptocurrency market is undoubtedly seeing retracements across virtually every coin, which has temporarily set up many potential shorting opportunities including the LTC/USD trading pair. This consolidation can provide traders who have the ability to short the market with opportunities to make money as the market moves down. After the equilibrium/symmetrical triangle pattern played out in the $205-$217 range for almost a week, a decisive and rapid break downward occurred with correspondingly weak bounce attempts at crucial support zones, i.e. $200 (psychological number of former support now resistance), $193 and $181 approximately. The lack of any significant bullish action at key areas consequently provided little bounces of which to profit unless you caught the bottom of the wave/move down. Moreover, the structure from an Elliott Wave standpoint appears to be an A-B-C retracement and until buyers step in and prove that we can set higher highs and higher lows, with the latter being a bare minimum, the bears will remain in control of the market for the time being. Short-term: Bearish Medium-term: Neutral/bullish Long-term: Bullish. From an Elliott wave standpoint there should be an attempt to push up the price slightly to the $187-$193-ish area for the B of the A-B-C wave pattern as is displayed on the chart (it is important to note however that the B wave can vary and does NOT need to get up to these prices). At the completion of the B wave, a short position can be taken with a stop at the most relevant and recent swing high, which will offer tough resistance for bulls to break through. In addition, each trader needs to assess their own personal risk tolerance and management, which is one of the most important aspects in trading. Moreover, reducing some exposure in the market at times of unpredictability is another important aspect that should be considered via taking profit with some of the position size taken laddering sells. The first target area is $173 with target 2 being at $168 and target 3 in the $162 area. Again, consider laddering sell limit orders and taking profit as we continue to dip and retrace, as you can always buy back into strength and go with the general trend and momentum of the market instead of against it. Furthermore, utilizing a Fibonacci retracement of the entire structure can help to pinpoint likely areas of support, as well as utilizing multiple (exponential moving average) ema's to confirm the eventual momentum change. Confirming a momentum change on larger time frames can be useful incorporating an ema strategy. When the 55-day ema is supporting the other more short/medium-term ema’s, namely, the 8, 13, 21 and 35 day ema’s with the candle closing clearly above is the indication that the market will begin a new trend and the trend has reversed. However, it is important to note that this strategy of using the ema’s is not full proof as it is a lagging indicator and this will not help in catching the absolute bottom or top of a move in the market.
Comment:
*Update Notice* I posted this chart on the 4-hour time frame which distorts the wave counts in terms of the time. The wave counts are shown more accurately on a 1 or 2 hour time frame. The B wave of the A-B-C corrective pattern hit the target range of $187-$193 earlier tonight and we are now getting some choppy action in the low $180's. Per my chart and reasoning above, if you have entered a short position from the B wave at $187/higher the targets still stand until further notice with the price action in the market. As always stay updated with what Bitcoin is doing as Litecoin and Bitcoin are positively correlated!
Trade closed: target reached:
Targets 1, 2 and 3 have all been met and reached as of the most recent price action! Congrats if you got in on this short and took advantage of the Elliott wave analysis in being better able to navigate this market retracement/pullback. If you have not laddered your sells as recommended you could be more aggressive and target the $154 area as the 4th target.