Litecoin (LTC) retracement complete
Normal retracement for Litecoin complete, higher highs should be expected.
Gann Confirms Retracement Complete
Gann’s work is a methodology of genius and consistency. Litecoin’s chart provides a very clear example of how Gann’s analysis and methodologies can be utilized to determine where turning points in the market may end or begin. First, let us consider the major swing low in December 2018, which was also yearly 2019 low. That low of $22.17 on December 14th, 2018 began a 110-day rally that saw Litecoin move all the way to 99.89, or +$77.72 (+350.56%). I find this almost funny in a way. If you know anything about Gann’s analysis, you’ll know that the number 7 and 9 are an extremely important number. Additionally, Gann focused on prices and days of the year equaling levels of degrees in a circle, like a compass. So it is somewhat amusing that the amount of the price move has a strong series of number 7’s, the most recent 2019 high has a series of 9’s and the percentage move was nearly 360%.
On the current Law of Vibration time cycle, Litecoin topped out at the 50% range – 96 days (light blue vertical line). From the 2019 high of 99.89 on April 3rd, 2019 to today (April 26th, 2019), is 23-days or 3-weeks. A 3-week a reversal off of a large and expansive bull move is common in Gann’s work and many other forms of technical analysis. Litecoin has fallen for three consecutive weeks. And for any of you Elliot Wave fans, an A-B-C Corrective Wave has been completed as well. The daily low matches yesterday’s low – and its created a pattern known as a tweezer bottom. This is a bullish reversal signal. This two candlestick pattern shows up right against the 0.618 Fibonacci arcs and the 45-degree angle. The daily chart also shows bullish divergence between price and the Composite Index. Bullish divergence appears when price makes lower lows but the oscillators (Composite Index) makes higher lows. This means that the momentum pushing prices lower has decreased and may be ending.
Psychological Bear Trap
If you have not been paying attention to the news regarding Tether, then you may have missed out on one of the most bearish stories in cryptocurrencies since the Mt. Gox debacle. The New York State’s Attorney General’s office accused Bitfinex of hiding $850 million in losses by using Tether cash reserves. Tether is the most common and most used stablecoin by traders – and the same people that run Bitfinex run Tether. Honestly, I’ve never been a fan of Tether even though I have used it for my short term trading – I’ve never believed in its honesty due to shady business dealings and questionable accounting practices. When this news hit yesterday, the entire cryptocurrency market dipped down -8.81% in just two short hours before recovering the majority of that loss into Friday’s trading. This kind of situation has resulted in a kind of rally for permabears in the cryptocurrency world.
This the situation has created a bear trap: a psychological bear trap. The meaning behind this type of trap is that traders who are short on cryptocurrencies believe that such a powerful negative news report would result in a continuation of the 2018 bear market. However, news of this sort is only of consequence to traders – not investors. And all the short sellers may end up doing here is to make further attempts to add to their short positions (which is occurring) while prices continue to appreciate and climb higher. These short sellers will need to turn into buyers as their positions get increasingly tenuous and hard to hold resulting in what is known as a ‘short squeeze’. Short squeezes are one of the most sought after conditions for bulls – because as short sellers turn into buyers to cover their positions, it forces other short sellers to cover as well – a sort of canabalizing event and effect. When we couple this with the technical conditions showing the retracement is finished, we have a perfect position to see prices rally much higher from here.