Litecoin has reached new lows near the 40 area within a five-wave bearish impulse, where we are now seeing some stabilization, which can be a signal for the bottom formation.
The recent recovery attempt from the lows is starting to show some constructive signs, as Litecoin may be developing a leading diagonal structure to the upside. This type of formation can often appear at the beginning of a larger reversal and may provide the first indication that sellers are losing control.
However, after completing wave (5) of a leading diagonal formation, we may now see a corrective ABC pullback before a sustainable recovery begins. Such a setback could bring Litecoin back toward the 42–41 support area, where buyers may attempt to establish a stronger base.
Overall, the risk-reward profile is becoming increasingly interesting as Litecoin approaches the potential end of a larger bearish cycle. Still, more price data and a stronger impulsive recovery are needed before we can confirm that a major low is in place.
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