Legendary trader John Bollinger has expressed concerns over the underperformance of Litecoin compared to Bitcoin. Bollinger, renowned for developing the popular technical analysis tool called Bollinger Bands, has observed a worrying pattern in the Litecoin market. When asked for an analysis of LTCBTC, Bollinger highlighted the disparity between the two cryptocurrencies, emphasizing Litecoin’s struggle to keep up with Bitcoin’s performance. This discrepancy raises concerns about Litecoin’s future prospects.
Examining the chart provided by Bollinger on November 28, 2023, it is evident that Litecoin is facing a lack of bullish momentum. The current price of around $69.566 is significantly lower than the upper Bollinger Band, indicating a bearish trend. Bollinger Bands are formed by plotting a range of standard deviations above and below a simple moving average, encompassing the price action. In this particular chart, the daily versus weekly candles display Litecoin’s struggle below the midpoint of these bands, further confirming the bearish indication.
A key feature in Bollinger’s analysis is the observation of a “2 bar reversal” pattern at the lower Bollinger Band. This pattern occurs when a bar reaches a high above the preceding bar but closes below the close of that particular previous bar. This type of pattern is often an indication of a potential reversal from an uptrend. In the case of Litecoin, this pattern near the lower band signals resistance to any upward movement, indicating prevailing selling pressure.
To further evaluate Litecoin’s performance, Bollinger also analyzes the Bollinger %B indicator. This indicator compares the price of Litecoin to the range defined by the Bollinger Bands. A %B value below 0.5 suggests that Litecoin’s price is closer to the lower band than the upper band, indicating potential weakness. The chart reveals that the indicator fails to cross the 0.5 level after a sharp decline toward 0, indicating that the price frequently touches or falls below the lower band. This consistent trend further highlights the limited potential for an uptrend in Litecoin.
Another important indicator assessed by Bollinger is the Bollinger Band Width (BBW), which measures volatility by evaluating the width of the Bollinger Bands. In the latter part of the chart, the narrowing of the BBW indicates a decrease in volatility, often preceding a significant price movement. Therefore, the narrowing BBW on the Litecoin chart suggests a tense market, potentially signaling an upcoming breakout or breakdown. Traders must closely monitor these volatility indicators to gauge Litecoin’s next move.
When considering Bollinger’s mention of Litecoin’s underperformance relative to Bitcoin, it is crucial to recognize that Bitcoin often establishes the trend for the entire cryptocurrency market. If Litecoin fails to keep up with Bitcoin’s movements, it could signify a lack of confidence or interest from traders, not only in altcoins but specifically in Litecoin. As the current rise in Bitcoin dominance indicates, investors may be increasingly favoring Bitcoin over other cryptocurrencies, contributing to Litecoin’s underperformance.
Bollinger’s technical analysis raises serious concerns about Litecoin’s position in the market. The price action at the lower Bollinger Band, the bearish “2 bar reversal” pattern, the sub-0.5 Bollinger %B values, and the narrowing BBW all suggest that Litecoin may continue to face downward pressure in the near term. As of the time of writing, Litecoin is trading at $70.05, having fallen below the key support of the 0.236 Fibonacci retracement level at $69.98 two days ago. It is crucial for Litecoin’s price to close above this level on a daily basis to regain bullish momentum and mitigate the downward pressure it currently faces.
The concerns expressed by legendary trader John Bollinger regarding Litecoin’s underperformance compared to Bitcoin raise important questions about the future prospects of the cryptocurrency. Investors and traders should closely monitor Litecoin’s price action in relation to the Bollinger Bands and other volatility indicators to make informed decisions about their investments.