Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Litecoin’s drop below USD 90 could encourage the bears.
- The 4-hour market structure and daily timeframes favored the sellers.
Litecoin fell under a range in which it has been trading since early February. In doing so, it greatly shifted the bias in favor of the bears. The sharp drop revealed massive selling pressure a few days ago and the volume was also huge.
Read Litecoins [LTC] Price Forecast 2023-24
This happened at the same time Bitcoin fell from $23.5k to $22k on Friday, March 3. While BTC had some bullish hopes, Litecoin showed that further losses are to be expected.
Partially filling the fair value gap could provide short sellers with a good entry
Source: LTC/USDT on TradingView
Litecoin dropped dramatically from $95.4 to $88.8 within a single 4-hour candle. The session closed below the range lows at $90.5, but was still within the bullish order block in that zone, marked in cyan.
This drop highlighted two things. One was that the bias was strongly in favor of the bears, which was reinforced on an H4 just below the bullish order block.
Another was that there was a major imbalance left in the charts. Not all imbalances can be filled completely, but a 50% fill was a possibility. If this scenario were to play out for LTC, the coin would rise to the $92.8 resistance level before being rejected.
The RSI has been below the neutral 50 since March 2, indicating a continued bearish trend. Meanwhile, the OBV was at a support level from February and indicated that selling pressure was dominant in March.
Realistic or not, here is the market cap of LTC in terms of BTC
It was a bit tricky because even a partial fill of the FVG would break the structure and flip it to bullish.
Therefore, buyers should be wary of a break above $95. Short sellers may try to enter the market after a retest of the $89-$90 area, with a tight stop-loss above the recent lower highs at $91.9, and take profit on the $85 support.
The falling prices caused an increase in Open Interest, as bears claim
Source: Coinalyse
On the 15-minute chart, we can see falling prices over the last 24 hours.
The OI, which had been flat for some time, rebounded and continued a strong upward trend over the past few hours.
This indicated that short sellers were likely to enter the market and outlined strong bearish sentiment behind Litecoin. However, the projected funding rate remained positive.
Futures market findings suggested that a sharp downward move could occur in the coming hours.