A Detailed Breakdown of Litecoin’s 4 12 months Cycles
Right here is the Bitcoin 4 12 months Cycle that I’ve mentioned in previous newsletters:
And if we zoom out to the twelve-month timeframe for Litecoin…
We’ll discover that the value chart is a spitting picture of the Bitcoin 12 month chart.
Litecoin showcases a 4 12 months Cycle – similar to Bitcoin.
And similar to LTC/USD is lagging behind the price action of ETH/USD…
LTC/USD is definitely additionally lagging behind Bitcoin in its personal 4 12 months Cycle…
The Litecoin 4 12 months Cycle
Let’s dissect the Litecoin 4 12 months Cycle.
Candle 1 is arguably essentially the most exponential section within the 4 12 months Cycle the place LTC/USD reaches a brand new All Time Excessive.
Candle 1 is then adopted by Candle 2 the place a Bear Market correction happens.
Curiously, Candle 2 retraced -92% in each LTC 4-12 months Cycles.
Candle 3 then follows which figures because the bottoming out candle.
Then comes Candle 4, which doesn’t eclipse Candle 3. Actually, Candle 4 kinds a Decrease Excessive relative to Candle 3.
That mentioned nonetheless, the underside of the candle physique of Candle 4 efficiently turns the highest of the candle physique of Candle 3 into a brand new assist to type a Increased Low.
This kinds the very beginnings a of macro U-Formed bullish reversal formation that precedes a brand new Candle 1 to start a brand new 4 12 months Cycle for LTC.
The Multi-12 months Downtrend…
Candle 1 performs a vital function within the 4 12 months Cycle for Litecoin.
It’s the first candle in 4 years to have the ability to break the multi-year diagonal resistances that has figured as a severe level of rejection for value.
This break of the multi-year trendline is what propels Litecoin to interrupt its outdated All Time Excessive (i.e. the ATH that was set within the earlier Candle 1) and enter Worth Discovery in the hunt for a brand new All Time Excessive.
Bitcoin additionally has a multi-year trendline resistance that persistently rejects value all through its personal 4 12 months Cycle:
Nonetheless the principle distinction right here is that Bitcoin breaches this trendline a lot earlier than Litecoin does.
That’s, this trendline acts as a resistance to Bitcoin’s value for 3 years, the place Candle 4 is the candle that breaks the diagonal; for Litecoin, this trendline is damaged after 4 years in Candle 1.
This a testomony to Litecoin’s price-lag behind Bitcoin.
Key 4 12 months Cycle Ranges for Litecoin
Let’s construct on the insights talked about earlier within the context of key 4 12 months Cycle value ranges for Litecoin:
All through a whole Litecoin 4 12 months Cycle, value tends to take care of a constant assist (i.e. inexperienced stage) all through the years earlier than lastly taking off.
The First Litecoin 4 12 months Cycle (2013-2016)
For instance, within the first 4 12 months Cycle for Litecoin, ~$2.70 figured as a pivotal assist (inexperienced) which Candles 1, 2, and three maintained (although not with out some draw back volatility within the type of wicks).
Crucially, Candle 4 kinds a Increased Low relative to the ~$2.70 assist then turns the highest of Candle 3 into new assist upon the twelve-month candle shut.
Extra, this Increased Low continues into Candle 1, whereby Candle 1 turns the highest of Candle 4 into new assist earlier than spring-boarding into a brand new explosive uptrend.
The Second Litecoin 4 12 months Cycle (2017-2020)
Within the second Litecoin 4 12 months Cycle, value rallies to never-before-seen All Time Highs.
Candle 2 then kinds and corrects -92%. In doing so, LTC produces a draw back wick into the purple horizontal stage of ~$23.70 to show this stage into a brand new assist.
In any case, this very value stage acted as a resistance within the 2013-2016 4 12 months Cycle, particularly in Candles 1 & 2 of that cycle.
Nonetheless, Candle 2 of the 2017-2020 cycle manages a candle shut above the inexperienced horizontal stage which was the earlier resistance in Candle 2 of the earlier 4-12 months Cycle.
In sum – a brand new Candle 2 turns the highest of an outdated Candle 2 into new assist.
And in reality – the Candles 3 and 4 that observe proceed to carry this new assist (whereby the candle-body of a Candle 3 is of an analogous dimension in each cycle).
Essentially, the outdated resistance of ~$23.70 that rejected the outdated Candle 1 and Candle 2 is efficiently was a brand new multi-year assist within the new Candles 2, 3, and 4.
Key Insights – Abstract:
- Candle 1 rallies to new All Time Highs.
- Candle 2 then kinds a Decrease Excessive relative to Candle 1 and begins a Bear Market.
- Candle 2 tends to retrace -92%.
- A brand new Candle 2 tends to show the highest of the outdated Candle 2 into a brand new assist.
- This assist is then revered by the following Candles 3 and 4.
- Candle 3 wicks in direction of the upside to substantiate the continuation of the multi-year diagonal resistance.
- Candle 4 turns the highest of Candle 3 into assist however kinds a Decrease Excessive relative to Candle 3.
- Candle 1 turns the highest of Candle 4 into new assist.
- Candle 1 breaks the multi-year diagonal resistance.
- Candle 1 rallies to new All Time Highs.
- Steps 2 to 10 repeat.
The New Litecoin 4 12 months Cycle
What might the subsequent Litecoin 4 12 months Cycle seem like?
Assessing the height for Litecoin’s explosive Candle 1 uptrend in 2021 goes past the scope of this article.
As a substitute, this remaining a part of the publication is about what kind of value motion we would count on from Litecoin over the approaching years.
However for the sake of discourse, let’s look to the one recurring fixed in Litecoin’s 4 12 months Cycle – the Candle 2.
Every Candle 2 all through historical past has retraced -92%.
Primarily based on this perception, Litecoin subsequently kinds a green-red vary that spans all the candle-body of Candle 2.
Within the first 4-12 months Cycle, Litecoin rallied +781% from the underside of the vary (inexperienced) to the highest (purple).
Within the second 4-12 months Cycle, Litecoin rallied +620% from the underside of the vary (inexperienced) to the highest (purple).
So for the sake of dialogue, let’s assume a diminishing price of return by -160% (i.e. 780% – 620% = 160%).
If the Candle 1 have been to rally +460% (i.e. 620% – 160% = 460%) then this form of extrapolation would counsel a LTC Candle 1 peak in 2021 of round ~$1700 (not accounting for upside volatility/wicks).
So from then onwards – right here’s what the Litecoin 4 12 months Cycle might seem like, based mostly on the important thing recurring technical value tendencies mentioned all through the publication up to now:
Wherever the explosive Candle 1 within the new 4 12 months Cycle peaks, Litecoin would possible type a brand new Candle 2 the place the upside wick of this candle would type a Decrease Excessive to the upside wick in Candle 1. This Decrease Excessive would determine as a resistance for the subsequent few years.
Within the new Candle 2, LTC would expertise a brand new Bear Market, the place value might retrace as much as -92%.
Wherever the brand new Candle 2 manages a full-bodied twelve-month candle shut, the underside of mentioned candle would determine as a key assist for the years forward.
The brand new Candle 3 would expertise numerous volatility, however find yourself as a comparatively small candle upon twelve-month shut.
The brand new Candle 4 would flip the highest of the brand new Candle 3 into assist, however finally type a Decrease Excessive to the upside wick produced by the brand new Candle 3.
And lastly, the Candle 1 of yet one more new 4 12 months Cycle would break the purple multi-year resistance to substantiate the start of a brand new macro uptrend.
Total, this extrapolation could also be helpful as a visible information on what to anticipate from Litecoin’s value motion for the upcoming years in its new 4 12 months Cycle.
Thanks for studying.
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