I feel that there’s no compelling reason to be a buyer at this point.

Litecoin pulled back ever so slightly on Tuesday as we try to figure out whether or not there is any real hope for the crypto markets turning around. We did have a decent Monday, but it should be noticed that it was Memorial Day in the United States, so a lot of the American institutional traders were not trading.

It’s also worth noting that there is a lot of noise just above as we had been going sideways for a couple of weeks, broke down below that level, and now are retesting that same area. In other words, we may see more sellers jump back into the market. It looks to me as if the 50-day EMA above will continue to cause downward pressure as well, which currently sits near the $83 level.

If we do break down, it’s very likely that Litecoin will go looking to reach the $50 level, and then maybe even the $40 level after that. This is a market that has been in a downtrend for quite some time, and it’s worth noting that the spread between the 50-day EMA and the 200-day EMA is almost perfect as far as a picture of a sustainable downtrend is concerned.

It’s very likely the crypto is about to see a lot of coins disappear because most of them have no real use case scenario. I personally have used Litecoin, and I like it a lot. However, adoption is a major problem and I think we are getting close to a situation where we will probably see half of these coins disappear, if not more than that. This is the natural cycle of things when it comes to technology, as we had seen in 1999 when so many of the hot tech stocks disappeared.

In an environment where risk appetite is scarce, it’s difficult to imagine that a lot of major institutional players are going to throw a ton of money at Litecoin. However, it’s very likely that it will survive, but I think that we have a rough couple of months at the very least ahead of us, so I feel that there’s no compelling reason to be a buyer at this point. In fact, what I would like to see is a lot of sideways and quiet action where people get used to whatever price we are trading at.

We need to be cognizant of the fact that there is a very real possibility of a “crypto winter” coming, which is when crypto markets do almost nothing but make people nauseous. 

The Litecoin market fell to test the bottom of the hammer from the Monday session and threaten the $100 support level. The $100 support level is an area that should continue to be important, and I think it is also best thought of as a “zone of support” that extends down to the $95 level, so we need to break through all of that in order to get aggressive to the downside. If we do break through all of that, it would be a very negative turn of events and could send this market racing lower.

Looking at this chart, it looks as if we are getting pretty close to breaking down, and with the strengthening of the US dollar, it does make a lot of sense that we would perhaps see Litecoin get crushed. Furthermore, Bitcoin has struggled in general, so I do think it also makes sense that we would see negativity in this market anyway, and I think at this point you cannot be a buyer of Litecoin. If you have the ability to short this market, then below $90 could offer a massive opportunity. That being said, I would not get aggressive at this point, and I do think that it is more likely than not that we wlll get a lot of choppy behavior in the short term more than anything else. Ultimately, given enough time I do anticipate that this is a market that will probably continue to look anemic, so I am not overly excited about being involved in it at the moment. This market will continue to be very noisy, but it may give us an opportunity to pick up Litecoin at extraordinarily low levels.

We need to be cognizant of the fact that there is a very real possibility of a “crypto winter” coming, which is when crypto markets do almost nothing but make people nauseous. If that is the case, then you need to start thinking along the lines of investing, and a lot less about trading. If we break down below $95, I anticipate that Litecoin will drop to the $75 level rather rapidly. The market struggling in the way it has does not give me enough confidence to be a buyer of Litecoin anytime soon. Because of this, I do not have a scenario in which I am a buyer.

If we do rally, it will be more or less a situation where we grind higher, not necessarily take off to the upside.

Litecoin has fallen during the trading session on Thursday to reach the 50 Day EMA. The 50 Day EMA is an indicator that a lot of people have paid close attention to, and therefore it is likely that we continue to see the 50 Day EMA offer bits and pieces of support, especially as it is racing towards the $125 level. There is a certain amount of psychological support there, and therefore you need to pay attention to that as well.

Over the last three days, we have seen a significant amount of resistance near the $131 level, and therefore a move above that level could open up fresh buying, and a market that looks as if it is trying to figure out whether or not it can take out to the upside. If we do rally, I think it will be more or less a situation where we grind higher, not necessarily take off to the upside.

The 200 Day EMA sits just below the $150 level, and therefore I think it makes a nice target. That is an area that I think will act as a bit of a “ceiling in the market”, and therefore if we were to break above there, it would change everything for Litecoin. Keep in mind that Litecoin will also be influenced quite a bit by larger coins out there such as Bitcoin and Ethereum. If they continue to rally, then that will be very good for Litecoin. It is worth noting that both of those markets did pull back a bit during the trading session, but at the end of the day, they look as if they are trying to break out.

If we break down and close below the 50 Day EMA, then it is likely that the market goes looking to the $100 level underneath. That is where we had bounced from rather significantly in the past, so therefore if we were to break down below that level it would be catastrophic for Litecoin. That being said, we are starting to see more money flow into crypto overall, so that should of course bleed over into this market as well. The candlestick size for the trading session should be paid close attention to, because it does suggest that there is much more in the way of conviction during the day.