Bitcoin retraced sharply since our last update, falling $123 dollars from the $459 high. In percentage terms, this hi to low decline amounted to 26%. Litecoin was disproportionally affected by the BTC correction, falling a fantastic 35 percent and effectively ending its short-lived rally. But let’s start with big brother first.
Bitcoin Retraces Sharply After Highs
Bitcoin retraced sharply after reaching new 13-month highs last Wednesday. The fall took us briefly to $336.22 but prices didn’t stay low for long and soon BTC/USD stabilized above the $350 handle. One coin is selling for $371.72 dollars at the moment. Last week we warned our readers that the parabolic gains are likely not sustainable:
”It’s hard to see this continuing without a sizable retracement in the next few days. This doesn’t mean that shorts are recommended because trends can often last far longer then anyone expects.”
As we can see on the chart above, for the past three days prices have been range-bound between $350 and $380 dollars per coin. A break below the low of this range should be a cause for worry to the bulls. But while the rally has stalled, it’s not over yet. It would take a decisive break of the $300 round figure to end the current uptrend.
On the upper side, resistance can be found at $400, followed by the November 4th high at $459 dollars per coin. But to restart the momentum higher, bitcoin will need to break the $500 dollars handle on most USD exchanges. Some of the major exchanges to watch are Bitfinex and OKCoin’s USD exchange. The reason we recommend watching other sites as well is because during the strong rally last week we saw major price differences. For example, BTC/USD topped out around $504 dollars on most exchanges, while on Fxopen/BTC-E we traded to a high of $459.20.
Short-Lived Litecoin Rally Ends
The short-lived Litecoin rally ended with a bang yesterday. As noted above, prices retraced a fantastic 35 percent from the highs, hitting a low of $3.13 before stabilizing. One coin is selling for $3.29 dollars right now. This is about 10 cents or 3.1% above the $3.19 breakout point.
The technical end of the rally doesn’t mean that LTC will stay put if bitcoin continues higher. This is a big IF however. And as the last 12 days have demonstrated, Litecoin is acting very weak. It couldn’t stand on its own after BTC corrected lower. This means that a LTC rally will likely be met by heavy selling on any bitcoin weakness.
A breakdown below $2.90 dollars per coin may start a new LTC downtrend. However, due to the recent rally, caution is advised on the short side. Markets rarely switch from bull to bear on a dime, without some consolidation in between.