LTCUSD: 218 Break Out Can Lead To Test Of 260?

LTCUSD update: As BTC is pushed lower by bearish momentum, this market is acting relatively strong by maintaining a tight consolidation. Often this type of relative strength leads to higher prices, especially when combined with the potential effects of this type of trend continuation pattern.

The symmetrical triangle is a form of consolidation that is considered to be a trend continuation pattern. The key to capitalizing on these formations is in waiting for the break out. The most important consideration is the over all market context that the consolidation is appearing within.

In the case of LTC, this triangle formation is materializing after a minor retrace which followed a well defined bullish structure off the recent lows of the 106 area. Simply put, it is forming a higher low just above the 186 support level. The 186 to 138 area is the .618 support zone relevant to the broad bullish structure of this market. This configuration in my opinion is a sign of strength and offers an opportunity to add to a position trade or even initiate a swing trade upon the break out which puts the trigger at 218.

My long term outlook remains bullish on this market and I have been carrying a position since the 50s. My more recent purchases have been in the 150 and 230 areas respectively. I will look to add at a break of 218, but keep in mind this is a position trade which means I use no stops or targets. I manage risk with strategic sizing. The swing trade, which has a more defined risk can be taken upon a break of 218, with a stop just below the 181 swing low. Which strategy YOU choose depends on your goal, outlook and risk tolerance. The first target for the swing trade would be the 260 level which is just below the 269 to 312 resistance zone (.618 resistance area of recent bearish structure) . It is also within a minor reversal zone that is projected off the 254 recent high.

What IF the triangle breaks lower instead? For one, it cancels the swing trade scenario, and secondly, a break lower will put price right back into the .618 broad support zone where I will be looking for new stability to materialize anyway. Any dramatic selling in BTC is more likely to affect this market in this bearish way, so that is something to keep an eye on, especially if you are more interested in the shorter term move.

In summary, at the moment this market is acting relatively strong to BTC which indicates it is poised to outperform IF BTC finds strength in the coming days. These type of correlations or relationships work until they don't so it is not something to count on 100%, just another argument to add to the mounting bullish signs in this market. For my position trade, I am looking to add on the 218 bullish break, and looking to lighten my position well into the next resistance zone which is the 269 to 312 area. Within that area, there is a 2.618 target projection which serves as a good point of reference. I am bullish and can afford the risk if this market falls apart, and that is something you need to strongly consider if you are looking to take a position as well. There is no safety in these markets, it is all about what you can afford to lose. If you can't lose, you especially should not be speculating in these markets. A trade should begin with your own personal assessment of risk, not a pattern on a chart. You do not need to be an expert analyst to know your level of risk, you need to be an expert at knowing yourself.

Questions and comments welcome.