Litecoin Inches Toward Bollinger Band Buy Signal After 6% Surge
Litecoin is among the crypto market leaders today, surging 6% intraday while Bitcoin remains flat. The single-day rally in LTCUSD might be enough, however, to generate a near-term buy signal using the Bollinger Bands. What might this mean for the altcoin, and could this be a sign that a more positive trend is beginning?
Possible Buy Signal Setup Lights Up In Litecoin
Litecoin has been among the most painful coins to hold over the last several years. In 2017, the silver to Bitcoin as digital gold went on a monumental, nine-month rally. During that nine-month stretch, Litecoin gained over 10,000% and put the coin in the top ten cryptocurrencies by market cap.
A lot has changed since then, with Litecoin now ranked number 18 by market cap, barely holding onto top 20 status. The altcoin has mostly trended sideways for the past seven years since the 2017 bull run, much to the disappointment of investors.
Brighter days might be ahead, at least in the near-term, as LTCUSD is working on a buy signal according to the Bollinger Bands.
All About The Bollinger Bands And How To Use Them
The Bollinger Bands arent just a technical indicator, but act as a complete trading system. The tool is primarily used to gauge volatility, as the bands tighten and narrow when volatility is low. When the bands begin to expand, it is a sign that volatility is returning.
Beyond that, however, the Bollinger Bands can also generate a buy and sell signal depending on where price is relative to the upper and lower bands. Each band is set at a +2 standard deviation from the middle-line, which is a 20-period simple moving average.
The idea is that only the strongest and most likely to be sustainable moves make it outside the upper or lower band. A 6% surge today in LTCUSD was enough to make it above the upper Bollinger Band. A close above the upper band is necessary to confirm the buy signal, especially when supported by higher than normal volume. A volume downtrend has been broken, checking this additional box in setting up the coin for a buy signal.
Tony Severino, CMT is the author of the CoinChartist (VIP) newsletter. Sign up for free. Follow @TonyTheBullBTC & @coinchartist_io on Twitter. Or join the TonyTradesBTC Telegram for daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Text source: NewsBTC
