An analyst has explained that a bear flag is potentially forming for Litecoin, which, if confirmed, might cause a decline for LTC to this level.
Litecoin Could Be In Danger Of Deep Decline Due To This Bear Flag
In a post on X, analyst Ali has pointed out a possible bear flag taking form for Litecoin. A "bear flag" is a pattern in technical analysis that, as its name implies, looks like a flag on a pole.
The pattern takes shape when the asset observes a sharp downward move and follows it up with a period of consolidation. This consolidation happens toward a slight overall uptrend, meaning that its upper level is created by connecting higher highs, while the lower line joins together higher lows.
The downtrend prior to the consolidation makes up for the pole, while the channel looks like a flag. Inside the flag, the price is naturally likely to feel resistance at the upper level, while support is at the lower one.
The bear flag is popularly considered a continuation pattern, meaning that the downtrend would continue after the pattern forms. This continuation happens as the price finally ends its consolidation and crashes through the lower level of the flag.
Like the bear flag, there is also the "bull flag," which forms in the opposite circumstances. In the case of this pattern, the price breaks out with a sharp upward move after the consolidation period toward the downside finishes.
Now, here is the chart shared by the analyst that sheds light on a possible bear flag forming in the 3-day price of Litecoin:
The pattern currently forming in the 3-day price of the cryptocurrency | Source: @ali_charts on X
From the graph, it's visible that Litecoin's 3-day price has possibly been consolidating inside a bear flag during the last few months. With the latest crash in the asset, though, the price appears to finally be breaking out of the pattern towards the down direction.
This plunge in the coin has occurred as the rest of the cryptocurrency sector has also reverberated with a crash. Unlike many other assets, however, LTC never enjoyed any sharp rally to kickstart the year, so the plummet has been especially damaging for it.
"Post-recent dip, the outlook for Litecoin appears challenging," notes Ali. "If the selling pressure continues, LTC might see a push down to $38, potentially confirming a bear flag formation."
Generally, breakouts from any flag pattern are of about the same length as the preceding pole, which is why the analyst has selected this target. If Litecoin's potential drawdown does play out in this fashion, then the asset would have seen a decrease of more than 41% from the current price levels.
LTC Price
Litecoin had been floating above the $73 mark just earlier, but following this 11% crash, the coin is now down to just $65.
Looks like the price of the coin has been moving sideways since the plunge | Source: LTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
Source: NewsBTC.com
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