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Litecoin has remained in a parallel channel during a period when the broader market has been unable to find a clear direction. However, another assault on the lower trendline caused a minor sell-off in LTC. This was supported by the Awesome Oscillator and MACD, which immediately favoured the bears.
Bulls, on the other hand, may look to respond at the 200-SMA (green) to prevent sellers from taking control. LTC was trading at $170.8 at the time of writing, down 0.4 percent in the previous 24 hours.
Litecoin 4-hour Chart
LTC has been oscillating within a parallel channel of $186-$174 for the past week. Another attack on the bottom trendline was developing in the market as the candles fell below their 20-SMA and 50-SMA.
If bears break through this defence, a stronger demand zone of $163-$166 could allow buyers to mount a comeback. If necessary, a bullish counter-reaction could be triggered by a near-term support level of $155.
Meanwhile, bulls would aim for an early cut-off at the confluence of the 4-hour 200-SMA (green) and the $170 price level. A rebound above the 20-SMA and the pattern’s midpoint would then set up a third top at the upper trendline.
Weak LTC Awesome Oscillator and MACD readings increased the likelihood of a parallel channel breakdown. Following a bearish twin peak setup, the AO, which measures market momentum, gave sell signals after falling below its half-line. Lower MACD highs were seen, indicating that more selling pressure was on the way.
Finally, the RSI was unable to maintain support near the mid-line due to the market’s downward pressure. Based on its current reading of 42, some further losses were anticipated before a reversal from oversold levels.
LTC was on the verge of breaking south from its parallel channel, which could result in another 10% sell-off. The indicators supported a bearish scenario, and short sellers were expected to capitalise on these bearish signals.
The 4-hour 200-SMA, on the other hand, could be the answer to many market uncertainties. A quick rebound would allow LTC to return to the confines of a parallel channel.