Mixed technical signals for Litecoin (LTC) can lead one to be equally bearish as they are bullish at the present value area and condition. This article will analyze the current conditions of Litecoin as it relates to it being inside the Cloud.

New higher low for a pivot higher? Bear Flag?

Litecoin (LTC) bear flag wick to wick.

Litecoin (LTC) bear flag wick to wick.

The chart above is Litecoin’s (LTC) daily Ichimoku chart. The red parallel channel represents the bearish continuation pattern known as a bear flag. Flagging patterns are prevalent and powerful continuation patterns that have an exceptionally high positive expectancy rate for turning into profitable trade setups. Of course, there is a substantial amount of subjectivity involved with how flag patterns should be drawn (i.e., from wick to wick or from body to body) on a chart. The image above shows the channel being drawn from wick to wick – thereby putting the current daily candlesticks just above the bottom of the bear flag channel – the daily Kijun-Sen is also at that exact level. Contrast that with the image below, where the channel is drawn from body to body, the current daily candle is trading below the bear flag. Even with the more bearish pattern (body to body), we can see that Litecoin is inside a notoriously volatile and congested trading environment: Litecoin is inside the daily Cloud. The Cloud represents confusion and volatility.

Litecoin (LTC) bear flag body to body.

Litecoin (LTC) bear flag body to body.

The volatility that prices experience inside the Cloud could undoubtedly pull the rug on any bears who are anticipating a strong sell-off following a drop below the bear flag. Below the bear flag are two strong support levels: the Kijun-Sen and the bottom of the Cloud (Senkou Span A). And these two support levels may generate or confirm a higher low. If a higher low is established at the present value area, then we could see the current consolidation zone on the daily chart turn into a strong base that launches a new bull trend. Some evidence of a new bull market is the current Tenkan-Sen above the Kijun-Sen, but more importantly, is Future Senkous Span A above Future Senkou Span B (the Cloud ahead is green).

Not shown are the weekly and monthly charts, which are also showing some extremely bearish conditions – some which are very imminent in their potential of a shock to bulls. At the present levels for Litecoin, I am waiting to add to any position. I want to see the Chikou Span and Litecoin move above the Cloud. When could this even occur? Really at any moment. Due to the volatile and unpredictable nature of price action inside the Cloud, we could very quickly see price make an astounding move higher. However, the longer time frames are positively weighted against such a significant rise – but it could very quickly change that outlook if there were a spike higher. If prices continue to respect the top and bottom fo the Cloud, then we could be looking at a further twenty-two days – which is when Senkou Span A finally moves above Senkou Span B.