Litecoin (LTC) has recently seen a sharp surge before encountering a downturn, finding support around $116.02. This level has become crucial for traders as it will determine whether Litecoin experiences a major rebound or a further decline. The price had initially risen sharply, reaching a key resistance at $127.70, fueled by positive macroeconomic news, including increased crypto adoption in the U.S. reserve.

Recent Price Action and Technical Indicators

Litecoin’s surge was followed by a decline, with investors taking profits after the price hit $127.70. This resulted in LTC falling below the 38.2% Fibonacci retracement level at $120.48, a crucial zone that would have helped sustain the upward momentum. The pullback intensified when Litecoin failed to maintain levels above $120.48, triggering increased selling pressure.

During the decline, Litecoin found brief support at the 50% Fibonacci retracement level at $118.25. However, resistance at $123.46 showed that bears were still in control, pushing the price down further. According to the Fibonacci retracement levels, $116.02 is a critical support level, and a breakdown here could signal an even deeper pullback toward $112.85.

Bearish Indicators and Potential for Reversal

The decline in price is reflected in various bearish technical indicators. The Exponential Moving Average (EMA) cross has shown a bearish momentum, with the price trading below the 9-day and 26-day EMAs. This signals potential downside risk and reinforces the notion that bulls have not been able to sustain their momentum.

The chart structure also hints at a potential double-bottom pattern, suggesting that Litecoin could see a reversal if the $116 level is defended by buyers. If Litecoin manages to bounce from this level, it could rise back toward the $121.74 resistance, which aligns with the last key moving average resistance.

Netflow Analysis: Accumulation or Selling Pressure?

Netflow data shows interesting trends in Litecoin’s movement. Over the last 24 hours, the netflow has been negative, with significant outflows of around -50.49K LTC from exchanges, indicating accumulation by investors who are withdrawing their holdings. This decrease in the available supply could reduce selling pressure, providing more support at the critical $116 level.

However, in the short term, there were some inflows of +9.16K LTC to exchanges, which might signal short-term selling interest. Despite these fluctuations, the 30-day net outflow of -68.96K LTC suggests that there is a broader trend of accumulation. If outflows continue, this could lead to a supply squeeze, pushing Litecoin prices higher.

Profitability and Market Sentiment

Regarding investor sentiment, the break-even analysis reveals that a significant majority of Litecoin holders—76.78%—are still in profit. This reduces the chances of panic selling, as most investors are still sitting on gains. However, should Litecoin decline further toward $113.83 or below, some investors may look to cut losses, increasing selling pressure.

Conversely, a rise above $119.36 would bring more traders into the profit zone, decreasing selling pressure. If Litecoin can break above the $127.70 level, most positions will be in profit, potentially fueling a push toward $132. But if the price dips below $113.83, downward pressure could mount, and LTC might test $108.80.

Conclusion

The critical support at $116.02 will play a decisive role in Litecoin’s next move. If buyers can defend this level, Litecoin may experience a rebound, with potential targets at $121.74 and $127.70. However, if the price falls below this level, further declines toward $112.85 or $108.80 could occur, depending on broader market sentiment and accumulation trends. Traders should closely monitor Litecoin’s price action around these levels for insights into its future trajectory.