Litecoin [LTC] momentum weakens – but is a reversal likely

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

LTC dropped below its rising channel. LTC’s price consolidation could persist into the weekend but change early next week.

Litecoin [LTC] hit rock bottom of $61 in December 2022 but rallied to $93 in January 2023, posting about 50% gains. The January rally followed Bitcoin’s [BTC] impressive performance as it jumped from $16k to $23k.

At the time of publication, LTC’s value was $87.23, with fundamentals suggesting an almost neutral structure. LTC could fluctuate and consolidate within this range into the weekend before a definitive price action after next week’s FOMC (Federal Open Market Committee) announcement.

LTC’s price consolidation could extend briefly in the $82 – $93 range

Source: LTC/USDT on TradingView

LTC’s uptrend since late December 2022 chalked a rising channel (white). But the bullish momentum faced two key challenges. The first challenge occurred around mid-January after an extended price consolidation temporarily pushed LTC out of the rising channel. The $82.44 support level held the drop and helped LTC recover and retest the channel’s mid-line around the $90 level.

The second challenge followed after LTC faced price rejection at $92.27, leading to a correction that saw the asset drop below the rising channel. LTC has been fluctuating between $87.23 and $92.27 for the past seven days. The above price consolidation could persist into the weekend and change early next week, depending on how BTC reacts to the FOMC release.

A likely bullish BTC could see LTC break above the $92.27 level and move back into the rising channel. Such a move could push LTC into the $100 zone.

But a bearish BTC would see LTC drop below $87.23 and retest the $82.44 support, invalidating the forecast described above.

LTC’s RSI value was 53 on the 12-hour chart, with possible rejection and rebound from the mid-level of 50 based on historical patterns. Therefore, LTC’s consolidation could continue into the weekend.

LTC’s open interest fluctuated as holders’ profits declined

Source: Coinglass

As per Coinglass’ data, LTC’s open interest (OI) rates declined around mid-January before fluctuating afterward. However, at press time, LTC recorded a gentle rise in OI, showing that more money was moving into its futures market – a trend that could boost its uptrend momentum.

On the other hand, price fluctuations cut down holders’ profits. According to Santiment, the 30-day MVRV declined from 20% to 6%; thus, short-term holders’ profits dropped by over 10%. The drop also saw investors adopt a somewhat bearish outlook, as evidenced by the negative sentiment.

Source: Santiment

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