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With a rising wedge completing a bearish pennant pattern for Litecoin, the bullish grip over trend control weakens. A 7.75% risk looming over Litecoin warns of a bearish fracture in the crucial 4-hour support trendline.
Despite the bullish recovery in Bitcoin prices in a highly volatile backdrop, Litecoin struggles to sustain the uptrend.
With a lack of support from trading activities, a bearish reversal looms over the LTC prices. Will Litecoin survive the sudden threat of a 7.75% correction to $58?
Litecoin’s Rising Wedge Turns the Tables
In the 4-hour chart, Litecoin’s recovery run after the bearish crash last Monday forms a V-shaped pattern. The reversal rally accounts for a price jump of 26.87% over the last nine days.
However, the rally rises under a bearish influence, leading to an overhead resistance trendline. With the recovery rally failing to gain trend momentum, the declining volatility results in a rising wedge pattern.
Coupled with the prevailing downtrend, the rising wedge completes a bearish pennant pattern in the 4-hour chart.
Currently, Litecoin is trading at $63.44 as it reveals a second consecutive bearish candle with higher price rejection from the resistance trendline. Hence, Litecoin faces the threat of a negative cycle breaking under the rising wedge pattern.
Litecoin’s Target Levels
The stochastic RSI lines (blue and red) give a bearish crossover in the overbought zone, reflecting bullish exhaustion.
Furthermore, the recovery rally has surpassed the 20, 50, and 100 EMAs at $62.14, $61.75, and $63.33, respectively. However, the upcoming negative cycle puts stress on the 100 EMA and may shortly result in a breakdown.
Based on the Fibonacci retracement level over the correction phase, the bull run is struggling to surpass the 50% Fibonacci level at $64.46. Furthermore, the bullish dominance at the 100 EMA in the 4-hour chart is at risk as the supply pressure increases.
A bearish breakdown below the support trendline holding the reversal rally will result in a massive crash for Litecoin. If the bearish trend begins, the next support levels are the 38.20% Fib level at $61.78 and the 23.60% Fib level at $58.46. The base level of the Fibonacci retracement is at $53.11.