Litecoin Approaches Bollinger Band Buy Signal After 6% Surge
Litecoin is one of the leading cryptocurrencies today, with a 6% intraday surge while Bitcoin is sideways. However, a single-day rally in LTCUSD could be enough to generate a short-term buy signal using Bollinger Bands. What does this mean for this altcoin? And could this be a sign that a more positive trend is beginning?
Possible buy signal setup on Litecoin is turned on
Litecoin has been one of the most painful coins of the past few years. In 2017, silver as digital gold went on a massive nine-month rally with Bitcoin. During those nine months, Litecoin gained over 10,000% and was in the top 10 cryptocurrencies by market cap.
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A lot has changed since then, and Litecoin is now ranked 18th by market cap, barely making it into the top 20. The altcoin has mostly been trading sideways for the past seven years since its bull run in 2017, much to the disappointment of investors.
LTCUSD is responding to a buy signal according to Bollinger Bands, so brighter days are ahead in the short term.
All About Bollinger Bands and How to Use Them
Bollinger Bands are not just a technical indicator, but a complete trading system. This tool is primarily used to measure volatility, as the bands become narrower and narrower when volatility is low. When the bands start to expand, it is a sign that volatility is returning.
But more than that, Bollinger Bands can also generate buy and sell signals based on where price is relative to the upper and lower bands. Each band is set at +2 standard deviations from the middle line, which is a 20-period simple moving average.
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The idea is that only the strongest and most sustainable moves will break out of the upper or lower bands. Today’s 6% surge in LTCUSD was enough to push above the upper Bollinger band. A close above the upper band is needed to confirm a buy signal, especially when supported by higher than normal volume. This additional box was confirmed to set the coin on a buy signal as the downtrend in volume was broken.
Tony Severino, CMT is the author of the CoinChartist (VIP) newsletter. Join for free. Follow @TonythebulBTC & @coinchartist_io On Twitter. Or join TonyTradesBTC Telegram for daily market insights and technical analysis education. Note: Content is educational and should not be considered investment advice.
Featured image from ChatGPT, charts from TradingView.com
