Litecoin has rallied a bit during the trading session on Friday to break above the top of the hammer from the previous session. By doing so, it does suggest that perhaps we are trying to get a little bit of a short-term rally, but that rally should be an opportunity to short this market yet again. After all, Litecoin has been significantly bearish for quite some time, and therefore it is probably only a matter of time before we see sellers step back in and take advantage of “cheap dollars.”
I do think that we probably have an opportunity to rally a bit, but the $100 level should be a massive resistance barrier as it had been previous support. The $100 level of course has a lot of psychology attached to it as it is a large, round, psychologically significant figure. A “fade the rally” type of mentality will probably continue to be the way this market moves, as we have sold off quite too drastically in a short amount of time.
On the other hand, if we were to break down below the hammer from the session on Thursday, that could open up the floodgates of selling. It is probably worth noting that the hammer sits right on the $50 level, which has a certain amount of psychology attached to it as well. Breaking down below there then opens up the possibility of a move down to the $40 level, maybe even the $25 level. Keep in mind that Litecoin is a small market and will be overly influenced by the likes of Bitcoin and Ethereum. As long as those continue to struggle from a longer-term perspective, it is likely that the Litecoin market will fall right along with it.
At this point, the Bitcoin market looks as if it is going to try to rally, and I suspect that if you overlay the Bitcoin market chart on top of the Litecoin market chart, it all looks the same. In other words, one will lead the other, and therefore you need to wait to see if Bitcoin can sustain its strength in order to get Litecoin bullish as well. If Bitcoin rallies a bit and starts to selloff, then Litecoin will almost certainly do the same and therefore you can use it as a secondary indicator.