LTCUSD was previously trading inside a descending channel pattern but has broken past the resistance, indicating that a reversal is underway. Price has yet to clear the resistance around the $33 mark before heading further north but a correction may be needed first.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is still to the downside. However, the gap between the moving averages is pretty close so a crossover could happen anytime soon. If that happens, bullish pressure could get stronger and push LTCUSD further north.
Stochastic is still pointing up so there’s room to head higher, but this oscillator is already nearing the overbought zone so profit-taking could happen soon. If selling pressure is strong enough, a quick pullback to the $28-29 level or broken channel resistance could be seen.
RSI is already turning down from the overbought zone to show a pickup in selling pressure. A larger correction could last until the moving averages dynamic support or until the area of interest around $27. Stronger bearish momentum could spur a drop back to the channel support at $16.
Dollar demand could kick in stronger as traders warm up to the idea that Trump might not be impeached after all and that fiscal stimulus could carry on as planned. However, profit-taking off dollar longs is expected during the upcoming FOMC decision this week.
Although many are expecting the Fed to hike interest rates by 0.25% this week, several analysts have pointed out that this might be the last tightening move for the year. Keep in mind that the latest batch of reports haven’t been all that impressive so the central bank could slow down its pace of hikes.
On the other hand, there is a lot supporting cryptocurrencies like LTCUSD at the moment. These assets tend to gain ground during times of risk aversion as traders seek higher returns in alternative markets outside of the traditional stocks or commodities.
At the moment, the focus is on the political uncertainty in the UK which has ended up with a hung parliament after the snap elections. This could play into their Brexit negotiations, which could mean more instability in the region.
