This update analysis on Litecoin, comin' at you live and direct, from the legend himself! Let's get it! Looking at the four hour chart, you can see that LTC is continuing to fill the right shoulder as anticipated. LTC has printed two failed attempts to rally back into the pink uptrend channel . After the most recent attempt, LTC turned lower and found support on the 50 EMA (in orange.) So, we can see that the 50 & 200 EMAs are starting to be supportive, which is important for the bullish continuation higher, and subsequent formation of the right shoulder. With that said, LTC has a little wiggle room. If LTC started to break below the 200 EMA , that would be a concerning development, and we would have to reassess the formation of the inverse head and shoulders pattern. As I write this, LTC is pulling back a bit, so it may retest the 50 EMA again. However, if we see continued support on the 50, I would expect a breakout into the pink channel to follow.
You can see that the 50% retrace is converging with the bottom of the channel, strengthening that area as resistance. So, it's clear why LTC just had a problem breaking back into the uptrend channel . If you'll notice, I've dropped a fat red trendline on the 50% retrace, to highlight how reactionary it's been. When LTC was coming off of the all time highs, it touched that level several times, and the major breakdown was produced by a break of that level. Furthermore, you can see that LTC has been slamming into it for the past 12 days. So it's CLEARLY an important level.
The recent pullback to the 50 EMA is in the form of a bull flag . The fact that we have the newly supportive 50 EMA rising into the tip of the flag, suggests that it could be the technical catalyst for the bull flag breakout. From there, I'm expecting to see a final break above the 50% retrace. What we don't want to see, is a failure and a big rollover. That would show that the 50% retrace is too hot for LTC to handle, and it would be a bearish development. So the be clear, the 50% retrace is the most important thing on the chart right now. The bulls need to get LTC above that level, and confirm it as support.
