8 1. What I wanted to do today, we're going to go over a rising wedge pattern. We'Re gon na see, if that's what's taking place with litecoin right now, because we're getting to an important area to where we're starting to have this squeezing effect as we're working up in this wedge. And what we're also noticing is the decrease in volume. As the price has been going up so you're having that divergence and what I wanted to do is go into investopedia here and we're gon na look at what they were saying for the rising wedge, and we want to see if we meet some of these characteristics Because, typically guys a rising wedge, you will have a break to the downside but it's, not a hundred percent confirmation there's times where you can be chopping back and forth in here, and we could still have another shot to come back up here to 45 or so And sometimes you can even get out of those rising wedges and have a break to the upside, so no pattern is actually confirmed until you either have that upside or downside breakout. But right now we are having that squeezing effect. As you can see these higher lows coming in and if we go into investopedia what I wanted to read to you here, it says during the formation there are a few indicators that can be used to determine whether the pattern is a real pattern or a disguise.
This formation typically moves towards the right, and the volume should be decreasing, showing a divergence between price and volume. The second indication is to look for how far the retrace has advanced from the beginning of the downtrend. If the move has advanced well above the 50 Fibonacci level, this pattern might not be a valid pattern. If it's still under that level, the pattern is still valid. So what we'll do is go back here now and we're gon na. Do our fibonacci test and we're going to take it up here from the high to the low, and what you can see is that we ended up bouncing right now, we're sitting about that 0.38 and what they were saying. Is this still a valid pattern? If we were not trading up above that 0.5 at 4617, we'll call it right there, so this definitely is still a valid pattern for our rising wedge, so that's, definitely something I'm going to keep an eye on, and I wanted to pay attention to now. If we go back to this here, what you can see is typically you'll. Have these higher lows then you'll have these highs up here and what you'll have is that downside break? You can see the volumes tailing off there and then it's. What it says about the breakdown is the one thing. Traders love about this pattern is that once the breakdown happens, the target is reached very quickly. Unlike other patterns, where confirmation must be shown before a trade has taken, legends often do not need confirmations, they normally break and drop fast to their targets.
Targets are usually located at the beginning of the upper trend line or the first pivot high, where the trend line is connected. In this example, the target was set at 700 in seventy three dollars and sixty nine cents figure. Four shows the short entry was made when the price broke the lower trend line at 786. So do you see this trend line break how we always talk about trend line, breaks and then look how far it fell from around that 780 it's called 788. All the way down there to that 772 and then you start to look down here around that target area, so that's how you determine the target, but these moves happen extremely fast and that's what you have to pay attention to, but right now that's what we have To be careful of is that we don't want to start having that downside break, because it happens fast, it happens aggressively and our target could be down here around. You know 28 29.00 and that'd be a significant loss. That'D be another 10 off our price of light coin right now, so this is definitely an area where you want to protect yourself, and you want to be careful so right now. Capital preservation is a key in this little pattern that we're working in right now. Now, what we have going for us, we're still up above this 200 moving average on the one hour time frame right now, so we are still holding that as support and that's, also coinciding with this trendline right here.
If we bounced out to the four hour time frame, what you'll see is that we're still trading up above our 20 or 40 in our 50 moving average, we are below our 200 moving average on the 4 hour time frame. So this is where I've been watching. My trades at I like to do it off the 4 hour time frame, but as you can see, that volume is tailing off as the price was continuously moving up and getting those higher lows so that's. Definitely something I'm going to keep an eye on. In the days to come here, even hours to come, we're gon na have to see I want to see us hold. This 50 now see us hold this trendline as well, who start breaking down below those guys we're most likely going to come back down there around. That thirty dollar range – it really could happen. It could happen fast, so maybe put an alarm or alert at about 36 45 we'll, throw it in there. Put that in and then we'll go up here and we'll. Put one in at about 41 74 is gon na, be another area that I want to throw an alarm on so right. There, though, guys that's what I want to see. I want to see if we have a break up above this hide around 40 80 and then, if we have a break to the downside about that 36 45, so I just want to bring this to y'all, just be careful right now.
This is a sticky spot. We'Re in we really have to watch and see if these higher loads are gon na continuously come in, and if we're gon na hold this trendline here and if we can keep making those higher loads, that's gon na be extremely important for us.