Litecoin/Yen (LTCJPY) Market Overview: Bearish Breakdown and Oversold Conditions Emerge

• Price declined sharply from a 24-h high of 15,427 to a close of 14,042, reflecting bearish momentum.
• RSI and MACD signals show oversold conditions and diverging momentum, hinting at potential reversal.
• Volume surged during the downtrend, confirming bearish sentiment but suggesting exhaustion at lower levels.
• Bollinger Bands widen during declines, indicating heightened volatility and possible consolidation ahead.
• Key support levels identified include 14,000 and 13,900, with Fibonacci retracements indicating potential bounce zones.

The Litecoin/Yen pair (LTCJPY) opened at 14,900 on 2025-10-13 at 12:00 ET and surged briefly to a 24-hour high of 15,427 before entering a pronounced bearish phase. By 12:00 ET on 2025-10-14, the price had fallen to 14,042, marking a sharp -9.3% decline. Total traded volume during the period was 748.65 units, with notional turnover reaching approximately ¥10,907,072. The price action suggests strong bearish control, particularly from the midday ET hours onward.

On the 15-minute chart, the 20-period and 50-period moving averages both trended downward, reinforcing the bearish bias. The 50-period line crossed below the 20-period, indicating a potential short-term bearish signal. The 200-period moving average, while not explicitly calculated here, would likely remain above current price levels, supporting the view that this is a retracement within a longer-term downtrend.

The MACD indicator showed a bearish crossover, with the line crossing below the signal line during the sharp decline, adding weight to the bearish momentum. RSI has entered oversold territory, currently reading near 25, suggesting a potential near-term reversal or bounce. This divergence between price and RSI is a key area to monitor, as it may signal an exhaustion of the downward move.

Bollinger Bands expanded significantly during the downtrend, reflecting rising volatility. Price closed near the lower band, a common area for retracement or consolidation. If LTCJPY holds above the 14,000 level, this could act as a psychological floor; a break below that would target the next support levels at 13,900 and 13,700. Fibonacci retracement levels suggest a potential bounce zone around 14,200, representing the 38.2% retracement of the decline from 15,427 to 14,042.

The market appears to be in a short-term bearish phase driven by strong selling pressure and declining momentum. While RSI and MACD suggest some overbought conditions, volume data shows a potential exhaustion of the downtrend, particularly in the final hours of the 24-hour period. A consolidation phase around 14,000–14,200 is likely if volatility stabilizes, though further breakdown could see LTCJPY test key psychological levels.

Backtest Hypothesis

To rigorously evaluate bearish signals such as the recent sharp decline in LTCJPY, a backtesting strategy must operationalize the idea of "selling at the next support level" using a defined mechanical rule. There are several practical methods to implement this:

1. Pivot-low method: Exits on the first close below a 10-day pivot low (a local low that is lower than the lows of the five days before and after). This method captures support levels based on historical structure and is robust to short-term volatility.
2. Percentage draw-down method: Exits when the close declines a fixed percentage from the entry price (e.g., 5% or 8%). This method is simple and easily scalable but may not account for volatility differences across time.
3. ATR (Average True Range) method: Exits when the close falls 2×ATR(14) below the entry price. This approach adjusts dynamically to market volatility and is often more adaptive to current conditions.

For this backtest, we recommend using the ATR method, as it aligns well with the volatility patterns observed in LTCJPY over the past 24 hours and provides a more nuanced exit rule than fixed percentages. This method would be applied to every confirmed bearish signal (e.g., the recent Bearish Engulfing pattern) from January 1, 2022, to today, using close prices for entries and exits.

If no preference is expressed, the ATR method will be used with the following assumptions:- Entry: Next day’s open following a confirmed Bearish Engulfing pattern.- Exit: Close below 2×ATR(14) of the entry price.- Holding period capped at 5 trading days to limit exposure.- Stop-loss: 10% below entry for risk control.- Price source: Close price for both entry and exit.

The backtest will then generate performance metrics (e.g., win rate, average return, max drawdown) and visualisations to evaluate the robustness of the strategy.