In a recent analysis on social media platform X, Ali Martinez has highlighted a significant shift in Litecoin’s price movement, noting its dip below a crucial parallel channel. A “parallel channel” in technical analysis is essentially a range where an asset’s price fluctuates between two parallel trendlines over time.
Parallel channels come in three variants, but for this discussion, we’re focusing on the kind aligned horizontally with the time-axis. In these cases, the asset’s highs and lows remain relatively equal, causing its price to consolidate sideways within the channel.
The top trendline of the channel usually acts as a ceiling, potentially halting further upward momentum, while the bottom can serve as a floor, preventing further decline. However, should the price break through either the top or bottom of the channel, it often signals a continuation in that direction. A breakout above might suggest a bullish trend, whereas a drop below could indicate bearish sentiment.
It’s worth noting that other forms of parallel channels exist, notably the ascending and descending types. These have sloping trendlines, representing consolidation towards either an upward or downward trajectory. A positive slope suggests an ascending channel, whereas a negative one indicates a descending channel.
Recently, Litecoin’s daily price appeared to be trading within such a channel. Martinez shared a chart illustrating this pattern for the cryptocurrency.
In the chart, you can see that with the recent bearish movement, Litecoin’s price has dipped beneath the parallel channel. If this setup continues, it could mean a bearish path forward for Litecoin.
Typically, moves that break out of a parallel channel tend to match the height of the original pattern. With this in mind, Martinez has suggested a target price: “Exiting this channel sets up a price move to $70,” he explained.
Since dropping below the lower trendline, Litecoin’s price has indeed been on the decline. It remains to be determined if this downward momentum will continue toward the $70 target.
Currently, Litecoin has experienced a roughly 6% drop within the past 24 hours, erasing its recent gains and bringing its price down to $88.
