The Litecoin price has been trading within an expanding channel since the beginning of 2021. This expanding channel pattern can be seen clearly on the 4-hour timeframe and this gives us high-quality key levels to watch for.
Every time the Litecoin price gets to any of these levels, we see massive rejections or support in price. And right now Litecoin is trading around one of these levels and there is a very high probability that we might see history repeat itself.
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The $373 ATH
The Litecoin ATH of $373 formed exactly under that resistance line for the expanding channel pattern. This confirms that the price is respecting the channel and if we continue to trade below it, there is a very high probability that Litecoin might crash back down to the $240 region in the coming days.
Beware Of The Spike
While entering this trade, it is important to note that there is a very high probability that we might see a price spike above the resistance channel before it dumps. This is known as liquidity hunts.
If this “liquidity hunt” price scenario plays out, trades with tight stop losses will most likely be taken out. This would push a lot of sellers out of the market before the Litecoin price begins its downward move.
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Warning: If the Litecoin price breaks above the channel resistance, find support, and continues to trade above it, this bearish scenario becomes invalid!
The price target for this bearish move is the base of the channel. We can expect to see Litecoin find support here and probably offer us a high-quality bullish trade setup in the nearest future.
Get More Trading Ideas
For more trading ideas watch our Youtube video where we dive into the technical analysis of Bitcoin and some of the biggest Altcoins in the market.
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