After its recent sell-off, the cryptocurrency Litecoin LTC/USD reversed and rallied when it reached the $225 level.
Savvy traders are able to predict when sell-offs will end by identifying levels that had previously been resistance. That’s what happened here with $225.
Traders who sold LTC at $225 in March thought they made the right move when it trended lower after. But on April 10, LTC broke through this level and soared to over $320 on April 17. After this happened, many of these sellers decided they were wrong. They shouldn’t have sold.
A number of them resolve to buy their Litecoin back, but only if they can get it for the same price they sold at. This results in buy orders being placed at a level that had previously been resistance. In this case, it’s $225.
If there are enough of these buy orders, the level to convert into support. That’s why LTC bounced when it fell back to $225.
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