Litecoin is the top performer among major cryptocurrencies with a sharp increase of 11% over the past 24 hours.
The key catalyst for the increase is likely to be Litecoin overtaking Bitcoin Cash in the cryptocurrency market cap rankings.
Both Bitcoin Cash and Litecoin address the same need of cheap peer-to-peer payments.
Litecoin overtaking Bitcoin Cash represents a current preference from the community for Litecoin over Bitcoin Cash.
One of the key factors which is likely to have played into this is the Bitcoin Cash hard fork which took place in mid-November.
This resulted in the hash power of the Bitcoin Cash network drastically reducing and price undergoing a sharp decrease to reflect the more insecure network.
The price of Litecoin has been in downward trends for the majority of the second half of 2018.
The downward trend became steeper around mid-November when the cryptocurrency market entered extremely bearish market conditions.
The rise over the past 24 hours has broken Litecoin out of the current downward trend, but it is highly questionable whether it can begin a continued rise from here.
The downward trend is likely to lessen in its steepness, but price action will likely exhibit similar patterns to those of the market leader Bitcoin with price rises followed by longer periods of declines.
The market as a whole is still likely testing to assess where the price bottom of these bearish market conditions is.
The hourly chart shows the price increase in further detail.
Momentum is still on the side of buyers with both the RSI and MACD increasing.
However, a bearish divergence is forming between the price and RSI which is typically considered a reversal signal.
Price has risen to higher highs even though the RSI has formed a lower high.
This shows price continuing to record higher prices despite buying pressure falling off.
- Litecoin overtakes Bitcoin Cash in the cryptocurrency market cap rankings.
- Litecoin breaks from a steep downward trend which has been forming since mid-November.
- Short-term momentum is still on the side of buyers with both the hourly RSI and MACD increasing.
- Traders should be cautious of price turnaround with a bearish divergence between price and RSI also forming on the hourly chart.