Finance,  Technology

When to buy Litecoin (LTC) for a profit? A technical analysis (May 2021)

 

Note: The information in this article is NOT financial advice.

 

Outline

 

 

In what follows, you will find conditions under which Litecoin’s price to the US Dollar is likely to rise or drop. The prices of the cryptocurrency are plotted over time. Each price point is the average of prices over a day, and the window represents a year. Indicators, such as Bollinger Bands, Volume, MACD, and RSI, will be used to infer the likelihood of the price to rise or drop. (Charts from TradingView are used.)

Bollinger Bands

bollinger bands - litecoin
Click on image to open in another window.

When the Bollinger Bands are placed against the prices of the cryptocurrency, a pattern can be observed. This pattern can be used to infer when the price of the cryptocurrency is likely to rise and drop. When the price touches or crosses the lower band, it eventually hits or crosses the upper band after some time (see image), and vice versa. Sometimes, the price only needs to gets close enough to either the lower or upper band to observe this pattern (see image). When the midline or mid-band of the Bollinger Bands has a positive (upward) trend, the price tends to stay above the midline, and when the midline or mid-band has a negative (downward) trend, the price tends to stay below the midline (see image).

Volume

volume - litecoin
Click on image to open in another window.

When the price crosses, touches, or nears either the lower or the upper band, there is an uptick in the volume chart (see image). The uptick may occur slightly after the price crosses, touches, or nears the lower or upper band; it may also occur when the price suddenly drops or rises. By an uptick, we mean a rise in the volume, where the volume for the day before and the volume for the day after the uptick are lower than the volume that causes the uptick.

Moving Average Convergence Divergence (MACD)

macd - litecoin
Click on image to open in another window.

When the price has a positive (upward) trend, the blue line of the MACD is above the red line, the farther apart these lines are (or the more they diverge), the more positive the price trend is. When the price trend turns negative (downward), the blue and red lines meet (or converge) and cross each other, and the red line is above the blue line; the farther apart they are, the more negative the price trend is.

Relative Strength Index (RSI)

rsi - litecoin
Click on image to open in another window.

Roughly, when the price rises, so does the RSI, and it goes down when the price drops (see image). When the value of the RSI nears 30, the price tends to cross, touch, or near the lower band, and when the value of the RSI nears 70, the price tends to cross, touch, or near the upper band. When the price crosses the upper Bollinger band and stays above it for some time and the upper and lower Bollinger bands are wider apart, the RSI stays above the 70 line for some time (see image). The trend of the RSI graph tends to coincide with the trend of the midline of the Bollinger Bands.

When to buy Litecoin (LTC) for a profit?

buy order - litecoin
Click on image to open in another window.

On May 7th, 2021, the price of Litecoin touched back the upper Bollinger band after it had crossed the upper band on May 4th and stayed above the band. The MACD lines were still diverging, with the blue line above the red line, although the blue line is slightly bent forward, suggesting that there may be a change in the price trend after May 7th. The RSI had been above the 70 line for some time and started to go down, heading back to that 70 line. All these factors suggest that the price of the cryptocurrency may drop after May 7th. Since the trend of the mid-band is positive, the price of the cryptocurrency may stay above or near the mid-band, and it may jump back up when the MACD lines start to converge, with the red line above the blue line, and when the RSI starts to rise after having been near the 30 line.

Last Words

On May 7th, 2021, the price of Litecoin may drop because it had been above the upper band for some time, the blue line of the MACD is slightly bent, and the RSI had been dropping. If the price drops, it may stay near the mid-band and rise again when the MACD lines start converging with the red line above the blue line and when the RSI start rising.


keevo crypto wallet
A Keevo cryptocurrency wallet. Click here for more. (Ad)


Leave a Reply

Your email address will not be published. Required fields are marked *