Litecoin (LTC) Tests Critical Support After 23% Drop — Bounce Potential Grows

Key Takeaways

• Wave Z was completed as ABCDE and entered the key support zone.
• RSI hit 14%, signaling extreme oversold market conditions.
• $63 holds as a critical level for a potential double bottom.
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The following analysis covers Litecoin (LTC) using two chart timeframes: the 4-hour chart for broader structural evaluation and the 1-hour chart for intraday predictive analysis.

The higher time frame presents a completed impulsive Elliott Wave sequence transitioning into a corrective phase.

The price fell to the significant support zone and shows some bullish signs, presenting the possibility of a corrective stage since the end of December.

LTC Price Analysis

The 4-hour chart of LTC illustrates a completed five-wave impulsive that reached a high of $146 in December, followed by a corrective stage ever since.

Notably, the corrective stage unfolded as a complex correction count WXYXZ with wave Z sub-divided into a five-wave ABCDE one.

This came after the second attempt to surpass the $146 high failed in February at a lower high of $140, which is the second wave X.

Since then, we have seen the formation of a descending channel, which led to today’s low of $63.

The Relative Strength Index (RSI) corroborates this exhaustion, reaching the extreme oversold zone at 14%. These values were last observed in July 2024.

A descending RSI in conjunction with the wave structure hints at a reversal possibility, but there are still no major bullish signs.

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The decrease since yesterday brought the price below the 0.786 Fibonacci level and onto the lower boundary of the key support zone.

Should this level hold, an upturn could look likely, but to call out a reversal, the price action must establish a higher low followed by a descending channel breakout.

LTC price spiked 7% at its highest point today, slowing showing that the buyers have been stepping in.

However, this may only be a temporary reaction to the oversold price.

LTC Price Prediction

The 1-hours chart offers detailed insight into short-term dynamics, showing the price actively correcting from its peak.

The current microstructure suggests an unfolding A-B-C zigzag correction as the sub-division of the E wave from the ABCDE correction since February.

Waves (a) and (b) appear completed, with the price now developing its C wave.

Fibonacci projection from Wave A identifies the current level as the 1.618 Fib extension, which is usually the price target for wave (c).

But looking closely at its sub-waves, it appears that wave (c) only develops its lower degree wave iv before another leg down.

Ideally, we can see the formation of the double bottom as another retest of the $63 low, which will conclude the correction since December.

Furthermore, the RSI on the hourly chart has reset from oversold levels after showing a hidden bullish divergence earlier in the downtrend.

This adds up to the assumption of the coming recovery, but the larger reversal still needs stronger confirmation.

If the $64 level fails to hold, a downside is possible, though less likely based on current momentum.

A bounce from $63 could initiate a new bullish impulse or a larger reversal targeting the descending trendline resistance around $70, aligning with the 0.786 Fibonacci level.

Until we see a breakout above the descending resistance, a bearish outlook remains.

Key Levels to Watch

• Immediate Support: $63 (descending channel base and prior low).
• Short-Term Support: $64 (potential higher low for reversal).
• Immediate Resistance: $70 (descending trendline and 0.786 Fibonacci).
• Critical Resistance: $77 (breakout confirmation zone).
• Invalidation Level: Below $60 (new lower low confirms extended correction).