- Litecoin price has formed a head and shoulders pattern on a 4-hour chart indicating a bearish outlook.
- If LTC slices through the neckline at $191.86, a 15% drop to $159.85 seems likely.
- However, a bounce from the demand barrier leading to a decisive close above $208 could invalidate the bearish setup.
Litecoin price has tapped a demand barrier multiple times in the last two weeks. Therefore, a breakdown of this level could spell disaster for LTC.
Litecoin price at crossroads
Litecoin price has seen an extended period of consolidation since March 9. During this phase, LTC has produced three distinctive peaks, with the center one being the tallest known as “head” and the other two around the same height called “shoulders.”
The valleys have a common base at $191.86, known as the “neckline.” This setup forecasts a 16.86% downtrend, determined by measuring the distance between the head and the neckline’s peak and adding it to the breakout point at $191.86.
Interestingly, Momentum Reversal Indicator’s (MRI) breakout line at $190 is within the neckline’s proximity. Therefore, investors need to wait for a decisive 4-hour candlestick close below $190 as a confirmation.
In case of a breakdown of the aforementioned level, Litecoin price will drop 16.86% to $159.86, which also coincides with another breakout line around the same level.
LTC/USDT 4-hour chart
Since a confirmation for the head and shoulders pattern will only come after the neckline’s breakdown, a bounce from it could put this bearish outlook on hold.
If this bounce leads to a decisive candlestick close above $208.13, it would create a higher high and invalidate the bearish thesis. In such a case, LTC could surge 10% to $227.88.
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