Litecoin price has formed a head and shoulders pattern.
The US will publish the latest inflation data on Tuesday.
The Fed will deliver its rate decision on Wednesday.
Litecoin price formed a small doji pattern ahead of the upcoming US inflation data and central bank decisions. It dropped to a low of $73.50, the lowest level since November 29. It has crashed by more than 12% below the highest level this year.
Inflation and central bank decisions
Litecoin and other cryptocurrencies have pulled back on Monday ahead of what will be a busy week. On Tuesday, the US will publish the latest American consumer inflation data. Economists expect the data to show that inflation dropped in November.
Precisely, they expect that the headline consumer price index (CPI) dropped from 7.7% in October to 7.3% in November. Supporting this view is the fact that gasoline prices have crashed to the lowest level in more than 12 months.
Core inflation, which excludes the volatile food and energy products, is expected to have dropped from 6.5% to 6.0%.
These numbers will come a day ahead of the Federal Reserve interest rate decision. Economists expect the data to show that the Fed will deliver a relatively mild rate decision this week. Precisely, they believe that the bank will hike rates by 0.50%, lower than the previous increases of 0.75%.
In addition to the Federal Reserve, other major central banks like the Bank of England (BoE) and the European Central Bank (ECB) will deliver their rate hikes.
Historically, Litecoin price tends to react negatively to higher interest rates. Therefore, a sign that they will likely slow its rate hikes in 2023 will be a bullish sign.
Meanwhile, Litecoin’s hashrate has started rising. Data shows that LTC rose to 567 TH/s on Monday. This increase was higher than last week’s low of 528 TH/s. Hashrate is an important figure that measures the health of the network, as I wrote here.
Litecoin price prediction
LTC/USD chart by TradingView
The LTC price has been under pressure in the past few days. It has managed to move below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the neutral level. It is also slightly above the important support level at $73.50, the lowest level on November 26.
The coin has also formed a head and shoulders pattern. In price action analysis, this pattern is usually a bearish sign. Therefore, Litecoin price will likely resume the downward trend. If this happens, the next key support level to watch will be at $65. A move above the resistance at $75 will invalidate the bearish view.
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