Analysis provided by Ashton Fraser, learn more about his trading strategies with the Forex Reversal Indicator.
Litecoin has been rising this morning, hitting a certain level, virtually to the very pip, for at least three excellent reasons, which I'll explain below.
Let's examine our LTC/USD chart. Specifically the H4 timeframe. Click below to expand:
Before we even apply any Fibonacci or other technical indicators, we can see one of the causes behind price stalling where it did. 18.00 is a whole number, hence a significant psychological support/resistance point. So that's the first reason.
Reason number two. I've performed the Fibonacci study from March's high on the 4th at 18.76, until last week's low at 15.11 :
And immediately, we have some further revelation, that just below 18.00, (17.97 to be precise) is also a Fibonacci retracement level, in this case the 78.6% level.
Third reason, using a Fibonacci extension on a shorter swing high to swing low (17.37 to 16.38), to ascertain potential take profit zones, gives us yet another important Fibonacci level - this time the 161.8% extension. Once again - price stopped at exactly at this point, as can be seen below:
So there we have it. Three solid reasons why price stopped where it did, once again proving that even when trading digital currencies, there's a method behind the madness, time after time.
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