Litecoin Bull Pennant

 

Its been a little while since we’ve had the opportunity to cover Litecoin! So, we’re going to go ahead and cover one of crypto’s must coveted assets.

https://www.tradingview.com/x/4Rq7s8sx/

It is super hard to look at the chart above and not see a massive bull pennant staring you back in the face.

This is the H4 resolution by the way.

Its been a long time since we’ve been able to mention the possibility of a ‘bull pennant’ on the charts, so let’s just do a quick review on what the hell a ‘bull pennant’ is exactly:

Source: https://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:flag_pennant_continuation

 

Essentially, pennants work in the exact way that you would expect. They are like little flags (similar to real pennants that you would get at a sporting event or something).

They are bullish continuation patterns, so the expectation is that this will happen:

https://www.tradingview.com/x/D6fvU09R/

Now whether or not this does happen is an entirely different story. In order to figure that out, we’re going to go ahead and look at the other indicators on the chart.

Relative Strength Index(14)

https://www.tradingview.com/x/xGuf4a11/

The RSI(14) on the H4 resolution was looking a bit dreary for a little while, but it appears that it has finally picked up pace in its most recent leg (dating back to April 9th to present).

https://www.tradingview.com/x/8Xiiq3Vw/

This does not represent divergence, however, the price has been moving at a snail’s pace regardless.

Let’s go ahead and check out the RSI(14) on a larger time frame.

Daily Resolution RSI

https://www.tradingview.com/x/1jpBWxHS/

In the chart above, we can see that the daily RSI(14) actually looks abysmal. Typcially on downturns like this one, we see the RSI(14) plummet all the way down to the oversold area (once its already gotten started). What we do see thus far is certainly not a positive sign at all and there appears to be no real indication that the impending sell pressure will be letting up in the near future.

https://www.tradingview.com/x/CuCJlJFR/

There certainly is a jarring juxtaposition between the RSI(14) on the daily resolution for Litecoin and its actual price action (bull pennant; seemingly signaling an impending burst of positive price action).

About the Bull Pennant

These patterns do not have a 100% success rate.

What this means is that there is not a guarantee that a bull pennant will manifest in extreme bullish price action. Although this is not necessarily something that a lot of T.A. sources tell individuals, it is a fact and one that is well worth noting because traders often make the mistake of identifying a pattern and subsequently assuming that the patter is all but guaranteed to fulfill itself over time.

Other indicators and market conditions must be examined before assuming that a pattern will fulfill itself successfully.

If the price does break below the support, then we can rest assured that it will more than likely plummet -10% (to the next reliable support point).

Currently, we can see that the price is nudging right up against the support point:

https://www.tradingview.com/x/emqnNhIz/

Its also worth noting that the price is right at the apex of this bull pennant formation.

https://www.tradingview.com/x/WvRr839s/

We can also see from the volume at the bottom of this chart that there has been a sharp decline in the volume over the last few periods (1 to 2 weeks).

Zerononcese Double Guppy

https://www.tradingview.com/x/gTNPG0YW/

Zerononcense Double Guppy shows the price floating around the bottom part of the channel (where it is red colored). This usually precedes a bounce, but this, by itself, is not a sufficient indicator of impending positive price action.

Exponential Moving Averages

Perhaps the most interesting discovery in this entire analysis is the fact that Litecoin has experienced two major golden crosses in the month of March alone:

https://www.tradingview.com/x/xDmMwvBE/

Zerononcense Reversion Ribbon V2

https://www.tradingview.com/x/RGKPj4ZB/

Perhaps one of the most potent of indicators that there is out there, the Zerononcense Reversion Ribbon V2 shows convergence (which is what we want to see if we’re hoping for confirmation of an actual breakout).

Conclusion

Only time will tell whether the pattern will pan out the way that we are expecting.

However, based on everything that we’re seeing now, it appears that the pattern has a solid chance of fulfilling itself.

Thus, here is the R/R on the trade:

https://www.tradingview.com/x/8pDrBKQh/

 

 

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