Litecoin (LTC) has experienced a remarkable surge in trading volume, with a 16 percent increase at the time of writing, according to data from CoinMarketCap.
This uptick in trading activity is accompanied by growing buying interest around the token, signaling renewed investor confidence in Litecoin.
Since the significant market crash on August 5, triggered by disappointing U.S. employment data and the poor performance of tech stocks, Litecoin has made a strong recovery.
Unlike many other cryptocurrencies that have struggled to rebound, LTC has continued to show a consistent upward trend, recording a 7 percent increase over the past seven days up to the time of writing.
Strengthening Buying Pressure Fuels Litecoin’s Rise
AMBCrypto reports that leading crypto analyst Dann Crypto has highlighted Litecoin’s impressive recovery. He noted that the token has formed a V-shaped recovery, a rare occurrence in the volatile crypto market.
“Pretty strange looking chart as this isn’t something we see often in crypto. Basically been straight up with no major dips since the flush early this month. Interesting price action worth noting.” he remarked.
This observation underscores the unusual yet bullish price action that has characterized Litecoin’s recent performance.
The sustained rise in LTC’s price can largely be attributed to consistent buying pressure. Daily chart analysis shows a gradual rise in the RSI indicator, indicating increased buying activity.
The RSI, which measures the speed and change of price movements, has been making higher highs since early August, reflecting strong bullish sentiment.
Additionally, the MFI indicator, a technical tool that measures the flow of money into and out of an asset, reached 68 after a steady increase.
This indicates more money flowing into Litecoin than out, a positive sign that buyers are dominating the market.
This bullish momentum is further reinforced by the Simple Moving Averages (SMA), with the 150-day SMA currently below the current price, indicating a long-term positive trend.
Moreover, the 50-day SMA is nearing a significant bullish crossover above the 150-day SMA, suggesting potential continued upward momentum.
Caution Advised Amid Potential Reversal
However, despite these positive indicators, traders should exercise caution. The Awesome Oscillator (AO), which shows the strength and direction of market trends, is displaying red histogram bars despite remaining in positive territory.
This suggests that while LTC is still in a bullish phase, the strength of the upward trend is weakening, which could lead to a reversal or a temporary pause in the rally.
One of the key resistance levels for Litecoin is at the 100 percent Fibonacci retracement level, around $68. The coin has faced several rejections at this level, but if it successfully breaks through, the next target could be $79.
Data from IntoTheBlock shows that 577,000 addresses purchased LTC between $65 and $69, indicating that the $68 resistance level may hold if these traders decide to sell to minimize potential losses.
In the futures market, sentiment appears to be shifting. Data from Coinglass shows that the long/short ratio for Litecoin has dropped to 0.91, indicating a slight bearish tilt with more short positions than long.
This could signal caution among traders, anticipating a possible decline in Litecoin’s price. Let’s see how it unfolds.