LTCUSD is turning lower after previously hitting resistance at the top of its descending channel. A double top pattern has also formed, adding confirming that a selloff is underway.
Price has yet to break below the neckline to spark the downtrend, which might last by around $25 or the same height as the chart pattern. This could take LTCUSD to the bottom of the channel near the 61.8% and 76.4% extension levels around $150-155. Stronger selling pressure could take it all the way down to the full extension at $134.82.
Stochastic is pointing up to show that there’s some buying pressure in play. However, the oscillator is nearing overbought conditions to reflect exhaustion among buyers. Turning back down could mean more declines. RSI, on the other hand, has more room to climb so another test of the channel resistance is possible.
The 100 SMA is below the longer-term 200 SMA to confirm that the selloff is more likely to resume than to reverse. The 200 SMA also lines up with the channel resistance to add to its strength as a ceiling.
Dollar demand ticked lower recently on weak expectations for CPI data, which might then dampen Fed tightening prospects. CPI is due today then the retail sales data later on in the week. However, cryptocurrencies are also on weak footing due to a number of factors.
First is the increased oversight from the SEC as the regulator requires cryptocurrency exchanges to register with them for trading digital assets. Next is the news of a shutdown of two exchanges in Japan, followed by the hack on Binance.
However, geopolitical risk could still lead to gains for the likes of bitcoin and litecoin. Recall that these assets picked up on news that Trump will be imposing protectionist policies involving higher tariffs on steel and aluminum imports. Then again, risk-off vibes backed down when the President said that they are open to exemptions for their allies, including Mexico and Canada.