Many cryptocurrencies have shown signs of strength over the past few weeks, but Litecoin has been relatively quiet. After climbing above $125 in mid-July, Litecoin began to fade, gradually declining to around $110. This price pullback, though not particularly dramatic, extended Litecoin’s months-long pattern of tight consolidation and hesitant movement.
However, the recent reappearance of a new technical signal on the monthly chart could suggest that this quiet phase is the calm before a storm for Litecoin’s price action.
Tony “The Bull” Points To Familiar 2017 Trend
According to crypto analyst Tony “The Bull” Severino, Litecoin’s Average Directional Index (ADX) on the monthly candlestick timeframe has bounced on the 20 level once again. The reaction to this seemingly average threshold is important because more often than not, it has signaled the start of a powerful trend for Litecoin.
Specifically, Severino pointed to similarities with the ADX signal that preceded Litecoin’s explosive rally from the $3.5 price level in 2017. As it stands, the Directional Indicator +DI (green line in the chart below) is beginning to lift off from its recent low and is showing signs of strength by bouncing off the ADX (purple line in the chart below), a behavior that mimics the early stages of the previous similar breakout.
He notes that in contrast, when the ADX hovered below 20 for most of the 2020 cycle, Litecoin only managed a shallow and short-lived rally. The current re-emergence of trend strength, with the ADX and +DI both gaining ground, suggests something structurally different is forming now, and it could mirror the bullish setup from nearly eight years ago.
Chart Pattern Shows Multi-Year Price Squeeze
The Litecoin monthly candlestick chart adds another layer to the technical picture. As shown in the chart above, the price of Litecoin has been forming a long-term symmetrical triangle pattern, compressing between descending resistance and rising support since its all-time high in 2021. This wedge has tightened very quickly in recent months, and the price is now pressing near the upper trendline.
When these chart patterns resolve after years of spiraling, they often lead to decisive moves. And when such price compression aligns with rising trend strength in the ADX indicator, as it now does, it becomes even more convincing. As such, this convergence of the technical signal alongside the chart pattern sets the stage for a possible repeat of the 2017 breakout conditions.
If that historical comparison holds, Litecoin could be on the brink of a substantial upward move. Right now, the most important price level to break above is $130, as this would mean that Litecoin is finally breaking above the upper trendline of this symmetrical triangle pattern.
At the time of writing, Litecoin is trading at $110, down by 3.7% in the past 24 hours.
from Bitcoinist.com https://ift.tt/feVBiL7
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