Most of the crypto markets have been hit hard by Elon Musk’s recent announcements. After tweeting some time ago that Tesla would accept Bitcoin as a payment method, he later backed down and said that Tesla would no longer accept crypto as a payment method. Musk cited the high energy use by Bitcoin miners, although he already knew this when he decided to accept Bitcoin earlier. His tweets have had a profound impact on several markets including that of Litecoin, which tends to evolve in tandem with Bitcoin. With the first tweet the price of Litecoin skyrocketed, with the second announcement the price plummeted. Litecoin lost $ 50 as a result of the last tweet as it was trading at around $ 380 and now trading at around $ 300.
Litecoin technical analysis
Litecoin has been on an uptrend since the start of the year. It started the year at around $ 132, then climbed above $ 400 (to around $ 412). Then it consolidated for a while, before briefly dropping below $ 300 in the wake of Musk’s announcement. Then the price climbed again to around $ 325 and then fell back to $ 300, as seen on crypto exchanges and derivatives trading apps like Easymarkets.
A clear uptrend line can be drawn from December 2020 to subsequent lows in 2021. Price is still trading above this trendline, supported by both cryptocurrency enthusiasm and the weak US dollar. Even with the recent drop, the price is still above the trend by a good margin, and that drop could only be a pullback in a larger uptrend.
Analysis of different deadlines
Over a 4 hour period, the chart appears to reveal support at around $ 305 or $ 300. This support keeps the price above. A fall below this support could mean a further decline. As the price fell below $ 300, that means the next target would be the 200 moving average (over a 4 hour period), followed by the uptrend line. A fall below this trendline would mean that the price has completely lost momentum and the preference should go down.
On the weekly timeline, it becomes clear that Litecoin recently broke the peak of $ 375 reached in December 2018. This is an important level, and the big picture shows that buyers still have the edge. If the most recent uptrend turns out to be wave number 1 in a rising Elliot wave pattern, then we can expect a decline (a continuation of the current decline) and then a rise that can easily overtake the $ 400 levels. This head start can take a few months, or even years, to form.
How to trade Litecoin at this point
On higher maturities, the uptrend still seems to prevail despite recent pullbacks. Long term traders would be wise to wait for good bullish signals to enter long positions. Short-term traders can profit from short-term declines, but there is no guarantee that the bearish movement will continue. At the moment, the preference is still on the rise, although it is not advisable to take a position without confirmation.
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