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Litecoin has recently attracted a lot of attention from individual investors. The alt’s on-chain metrics appear to be strong, and it has also made inroads in terms of development. Because of the increasing success of smart contract applications and NFTs, Litecoin announced ambitions to expand into other markets through OmniLite.
On the charts, however, a broader market sell-off seems to have trumped optimistic enthusiasm in the LTC market. After reaching a local high of $233.5, the digital asset fell by 33% and found itself within an important support zone.
As individual investors stop, Litecoin is likely to trade sideways in the next days until a more distinct trend emerges. At the time of writing, LTC was valued at $182.6 with a market cap of $12 billion.
Litecoin Daily Chart
Litecoin’s price mostly oscillated between $160 and $190 before forming a local top at $233.5. Volumes were relatively low during this time period as the price consolidated following July’s increase. A breakthrough on heavy volumes caused LTC to rocket higher and surpass its daily 200-SMA (green) — a hint that LTC’s bear market since the 19 May sell-off has finally ended.
The joy, however, was short-lived as panic selling pulled LTC further, with a single candlewick dropping as low as $160. At press time, the price was back within the aforementioned channel and could trade sideways in the next days.
In case sellers trigger another round of selling pressure, LTC would need to hold above $155 to avoid switching to a bearish outlook.
The daily RSI remained close to the half-line, indicating that there was some buying pressure in the market following recent losses. The Directional Movement Index’s +DI was close to zero since neither side was overly dominant. Furthermore, the ADX moved south from 28, implying that the market was approaching equilibrium.
While retail investors have recently aided LTC, On Balance Volume suggests that buying pressure remains well below levels seen in April and May. Long-term investors and whales would need to step up for a bigger comeback approaching May highs for LTC.
In the future, Litecoin could settle between $160 and $190 — a channel that has been active throughout August. Meanwhile, a wide market rally would provide some momentary relief, but the gains would be fleeting.
On the other hand, traders should be wary of a close below $155 because it might pull LTC down to its late-July lows of $105.