Rising wedge points to more weakness
Litecoin price slumped to the lowest level since June 26 as volatility and the US dollar jumped. The LTC token fell to a low of $52.36 and then bounced back to about $56.15. This price is about 15% below the highest level this month, giving it a market cap of over $3.9 billion.
LTC recovery fades
Litecoin, like other cryptocurrencies, made a strong recovery after it slipped to a low of $40.40 this year. It managed to rebound to this month’s high of $65.86.
Recently, however, this bullish trend has faded as concerns about the Federal Reserve resumed. Analysts believe that LTC and other cryptocurrencies rallied as investors priced in a more dovish Federal Reserve since inflation is cooling.
However, minutes published by the Federal Reserve on Wednesday showed that the bank will continue hiking interest rates. These minutes revealed that the committee believes that tightening is needed in a bid to prevent inflation being entrenched in the economy.
Therefore, there are signs that investors got significantly ahead of the Fed. Indeed, most central bank governors who have talked after the recent inflation data said that the tightening process will continue.
Litecoin price also declined as the US dollar made a strong comeback. The dollar index, which measures the strength of the greenback against a basket of currencies, soared from this month’s low of $104 to a high of $109.10. LTC and other cryptocurrencies have an inverse relationship with the dollar index.
Further, it retreated as concerns about the health of the global economy rose. On Monday, the PBOC decided to slash interest rates for the second time this year as the economic weakness continued. This explains why most global stocks and commodities have also retreated.
Litecoin price prediction
The four-hour chart shows that the LTC price formed a rising wedge pattern that is shown in green. In price action analysis, this pattern is usually a bearish sign. As a result, it managed to move below this pattern this week.
As it dropped, it managed to move below the 25-day and 50-day moving averages while the MACD moved below the neutral point. Therefore, Litecoin price will likely resume the bearish trend as sellers attempt to move below the support at $50.