Bitcoin market didn’t react with any decisive move during Tuesday, as the “head & shoulders” pattern remained on the same spot, pushing the “shoulder” even more. The minor correction around $46,100 should not be considered as a solely bearish movement and we should wait for a couple more days for further consolidation moves.
As we described in previous articles, the “head & shoulders” pattern indicates there would be a change in the established trend. The overall trend in this situation is considered bearish as the market is practically correcting from the all-time high level at $69,000. This could be a trend change driver that could emerge in the next days, confirming the pattern.
The moving averages have crossed each other on bearish formation, indicating that the support level will be tested again in the next few days. We have to point out that the stable market is producing a lot of moving average crosses, some of them could be misleading.
The trading volumes are performing occasional spikes that are moderately related to the price performance.
In the short-term analysis, we can see that during the last week, the market is taking steps back and forth, proving that the short-term trend around the $47,000 price level can hold, for now, bringing the market in a “return to the average” position, which is a common pattern in traditional and crypto markets. This pattern indicates that, in the short-term position, there is a price level where the coin or the stock returns to it after minor volatility ups and downs. This established price level is considered to be an average point, a fair price, where the market always returns.
This could become a similar pattern with the $47,000 zone, which could serve as the returning point if there are no other signals for uptrend or downtrend predictions.
At the end of 2021, Litecoin was trying to overcome the barriers between $125 and $200, which served as barrier levels for the market. In early November 2021, Litecoin managed to break the resistance level at $200 and climb until $280, before collapsing again in a month.
The market returned to familiar levels, ranging between $140 and $160 for the last 40 days. Litecoin has experienced different levels of correlation between its price and Bitcoin’s trend. For example, the recent surge in November 2021 was considered a contrarian move as the Bitcoin market had already moved in the all-time high levels around $69,000.
This is also an indication of the alt-season. The alt-season happens when the altcoins are over-performing against Bitcoin, creating lucrative returns for the investors. This usually happens after Bitcoin’s new high levels. The reason behind that is that crypto investors believe that the Bitcoin returns have been maxed out and they are looking for investments that will continue producing better returns.
This fact makes them liquidate some positions in the Bitcoin market (which has produced major returns for their portfolio) and pushes them into the altcoin market, delivering a massive inflow at altcoins and making their price jump all the way.
At this moment, there are small expectations for the Litecoin market as it will follow blindly any move from the Bitcoin market in either direction. The bearish reaction would be much quicker and will probably bring the market to the lower level, around $125 or lower.
The moving averages had two close crosses, with the last one to be on the bearish side, indicating that the market remains in a stable position, without a strong indication for the next trend in the market.
The trading volumes plummeted after December, showing that the market will remain in the same position for now.
The symmetrical position in the short-term diagram (an ascending move from $144 to $164 and the descending move from $164 to $144) shows that the ranging market will be tested between those levels in the next few days.
We might experience another similar pattern in the next days if there is another boom in the Bitcoin market, with a short-term perspective.
The opportunities in the day-trading window can be considered as periodic as we can see in the diagram below. The only pattern that can be recognized in the chart is that after any moving average cross, the market corrects, even at a minor scale.
This pattern happened during the last three signals from moving averages, regardless of their perspective, bullish or bearish. If the ranging period continues to exist, we might experience more signals on this side, driving the market to lower levels.
MACD index managed to remain in the “green” area, predicting that the market momentum can bring the market to a higher position. Taking into account that the ranging zone lays between $140 and $160, a minor uptrend towards $160 might be possible if there is an uptrend in the Bitcoin market also.
The RSI index has remained around value = 40, indicating that the market will remain in the same position, without any signal for a bearish or bullish trend to be on the way.
Bitcoin continues to range around $47,000, proving that the market is consolidating more to prepare us for the next trend. The more consolidation exists in the market, the more reactive will be the next moves in the market.
Litecoin, after correcting from $280 to $160, has sustained a ranging move between $140 and $160. This zone could remain for the next period if there is also a similar pattern in the Bitcoin market, which remained highly correlated with it.
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