AAX Intelligence: Bitcoin (BTC), Compound (COMP) & Aave (LEND) — AAX News & Insights
BTC Review
Wyckoff analysis invalidated
In the AAX Intelligence report released on the 20th of July (BTC Wyckoff analysis) it was suggested that BTC could be in a distribution stage, and that BTC was ready to potentially see some significant red candles. This chart is shown below.
However, this was definitely not the case. In the last report on the 27th of July it was stated that if BTC broke $10250 USD that this analysis would become invalid — BTC is currently at $11250 USD.
So where does this leave us after BTC has gained 17% since the last report? Will BTC continue to rise, or is this just a pump before a major BTC dump?
BTC — Resistance levels
BTC’s huge move above the significant $10500 USD resistance level, has created some breathing space for BTC. This gap between BTCs current price and the next resistance level should allow BTC to grow further.
Another way showing that BTC is free to move higher with little resistance is through the Gann fan. The Gann fan below originated in June 2019 and has provided support and resistance numerous times since its creation.
BTC has clearly moved away from the downwards trend from which this fan originated, however it is still applicable. As shown with BTCs recent sideways trading period the Gann fan provided resistance in the 2/1 region. The 4/1 level then provided support for BTCs move up in recent days.
BTCs next big resistance level
The next major resistance level is at $12316 USD. Once BTC reaches around the $12000 USD level there will be resistance from the Gann fan, R4 pivot point and the Fibonacci trend based extension.
Once this level is reached BTC could likely see a healthy retracement, probably towards the central or top line of the KC (Keltner Channels). However before this , a move towards $12000 USD would represent a substantial 6% increase from our current prices.
BTC Potential formations
BTC has formed a potential ascending triangle formation. The formation is bullish as demonstrated below.
Before the formation we see an upwards trend. This alongside the bearish divergence and the indicators which will be mentioned has created a bullish outlook for BTC.
BTC Indicators
Set one — MACD, SAR, Ichimoku cloud
Currently as stated earlier many of the indicators used for the reports are bullish. The Ichimoku cloud is currently bullish, seeing the price well above the cloud — alongside the cloud turning from red to green. As for the MACD just before BTC broke the $10500 USD resistance there was a positive crossover with the 12 day EMA crossing above the 26 day EMA. This created a green histogram with the MACD currently showing few signs of slowing.
The final indicator in this set is the SAR which is looking incredibly bullish. As the MACD had its positive crossover the SAR moved from above the BTC candles to below them. This is an indication of bullish momentum (however at the time this was debatable due to BTC being in a sideways trading period). The SAR still remains underneath BTC with a significant gap to the candles — very bullish.
Set 2 — Volume, EFI, RSI
In the second set of indicators we have the Volume, EFI (Elders Force Index) and the RSI. First let’s start with the volume!
As can be seen below there was a huge spike in the BTC volume after a prolonged downtrend during the sideways trading period. This huge green spike was then followed by a larger, albeit smaller red volume. The red spike marked a failed attempt by the bears to push the BTC price back down.
For the moment alongside the other indicators the volume is appearing bullish. However, the gradual slowdown of the green volumes suggests that a slowdown could be in play. The EFI also suggests that the bullish momentum will continue, although that the price gains will soon slow down.
As for the RSI it shows that there is currently huge interest in BTC — there is huge demand for the cryptocurrency. The RSI is currently above 80 which makes it very overbought, although unless the other indicators turn bearish this is a bullish signal.
Set 3 — Heikin Ashi, QQE MT4, PnF chart
The set three indicators are looking very bullish. When looking at the Heikin Ashi candles on the 4hr chart the green candles are dominating. This is a bullish sign when seen alongside other bullish indicators. To support these green candles is the QQE MT4 indicator. The indicator itself is currently bearish, however there has been a major divergence with the QQE MT4 and the price candles. If a positive crossover occurs where the yellow line will go above the red line this will be a major bullish signal.
Unsurprisingly, the PnF — like the other indicators — is currently bullish. Again the dominance of green alongside a lack of sell signals points towards green for BTC.
Indicators table conclusion
Conclusion
As can be seen in the table above, the bullish momentum is currently with Bitcoin. The break above $10500 USD after such a long rally from $3500 USD is spectacular, the cryptocurrency space is certainly bullish currently.
Although BTC will begin to face resistance at around $12200 USD and it will be interesting to see whether BTC can break that barrier at first attempt. If the unexpected occurs and BTC falls from its current position the first support level would be at $10700 USD. This is shown below with the R2 pivot point on the 4hr chart.
COMPOUND Analysis
COMPOUND is a decentralized protocol which allows users of COMPOUND to exchange Ethereum based assets, with users choosing which algorithmically set interest they want. The user will choose which asset they wish to hold with interest from COMPOUNDs algorithm dependent on:
- Users personal fundamental thoughts of the cryptocurrency
- Interest offered by the COMPOUND algorithm
- Users personal thoughts of coins future price action
COMPOUND is a decentralized finance (DeFi) protocol with its own native token COMP. With DeFi coins traded as hot property in the cryptocurrency market right now let’s have a look at the charts for COMP.
Great start — less spectacular recent performance
COMP had a great start finding its all-time low early on at $61 (still a 100% return from the $30 USD ICO). COMP then began to be listed onto various exchanges and was subjected to ferocious buying activity seeing COMP soar all the way to $372 USD only 6 days after the token ICO finished. This was a 1100% return from the ICO price — in less than a week! However, since then, COMP has consistently lost its value, falling from $372 USD towards $135 USD representing a 63% decrease from ATHs in June, as shown below.
However with many DeFi coins performing spectacularly recently (especially the one later on in the report…), what does the future price action hold for COMP?
Continued losses
(please note: only 1,2,3,4 hourly charts used due to lack of daily chart data)
As shown below COMP has continually lost value since its ATH, regularly being below the central pivot for five sessions in a row.
This is a bearish signal, however there has been a contraction of the Pivot Points (PPs). The contraction of PPs can suggest that the current trend could be coming to an end. However as demonstrated below it appears that there will be a short term sideways trading period — likely until the end of these PPs.
The COMP slowdown — formations
Since COMP entered the market it has created numerous formations. The main formations have typically been parallel channels with the addition of one descending triangle. However the significance of these previous formations is the ever decreasing angle of the resistance lines as shown below.
As shown by the formation angles and the chart COMP has seen a clear curvature. This is good news for COMP holders as it may suggest that the sell off is over. If the sell off is over and the curvature is obeyed, then a period of sideways trading before a move up appears likely.
Sideways trading — mixed indicators
QQE MT4, Ichimoku, BBs
Starting with the BBs they show that COMP is struggling for direction currently. The candles are currently moving in and out of the top and bottom bands with a breakout in either direction not occurring. Moving onto the Ichimoku cloud and it is currently bearish. The cloud is red while the price continues to remain underneath. In order for the sentiment to change from bearish to neutral (potentially bullish) COMP would need to make a break above the cloud.
As for the QQE MT4 the indicator is currently bullish. However as shown above COMP has failed to make the progress holders would have hoped for. A possible divergence has occurred which could lead to a negative breakout of this sideways movement.
More indicators — RSI, MACD, Gann HL
Currently the MACD is giving bullish indications, with a green histogram and a positive crossover in the negative area. However the MACD is on the verge of creating a bearish divergence with the candles. The MACD is one of the indicators attempting to push COMP above the $140 USD resistance level. Another bullish indicator is the Gann High Low (HL). The Gann HL has recently turned from red to blue. If this can be maintained that should be seen as a bullish indication. The final indicator the RSI shows perfectly the battle between the bulls and the bears with the indicator sat at 47, very slightly leaning towards increased selling over buying.
Conclusion
As can be seen with the table above, the indicators are currently very mixed. The indicators are pointing towards both directions. To take a position now would be highly risky, waiting for a breakout to occur should decrease the risk. This breakout will also change the indicators and increase the following towards one particular direction.
AAVE (LEND)
AAVE like COMP is a part of the DeFi section of cryptocurrencies. AAVE allows users to earn interest from depositing their coins into AAVE. AAVE also allows for the borrowing of cryptocurrency assets. AAVE are aiming to create a transparent infrastructure, that of which is decentralized for worldwide finance.
AAVEs meteoric rise
As a cryptocurrency trader seeing this chart and not being a part of AAVEs growth can be frustrating.
LEND is currently up 1700% since the start of the year, seeing the cryptocurrency at similar prices as the 2018 bull run. Although will this huge growth continue? Or is LEND showing signs of a slowdown?
LEND TA
LEND has recently broken its upwards trend and is in the process of its retracement. As shown below LEND is attempting to break above the 0.236 level having found significant support at the 0.382 Fibonacci retracement.
LENDs attempt to break the 0.236 is currently supported by the SAR and BBs. The SAR has given LEND positive momentum, with the SAR line below the price. It also has a fair bit of distance between the line and the candlesticks, cementing that bullish momentum for the time being. Alongside this it appears as though the BBs centre 20 day MA has provided support for LEND.
However worryingly LEND has found support with the lower BB and has not made a significant break above the 20 day MA. If LEND can break further above the 0.236 and use the upper band as resistance — this would be bullish. However currently LEND is at a crucial stage when concerning the BBs.
Divergences
Currently there are no divergences with LEND. The price is directly following the RSI, with the RSI at 52 there is no real indication of which way the market bias is at. As for the MACD the histogram is almost non-existent, with both of the EMAs directly next to each other.
Finally we have some bullish indicators for LEND. The Heikin Ashi has seen a long term green movement before a small period of red. If the Heikin Ashi can maintain this green period then there will likely be another wave of positive movement. This possibility of a new wave is supported by the Ichimoku cloud.
The Ichimoku has a green cloud while the price remains above the cloud — bullish.
Conclusion
In conclusion LEND is at a crucial point in terms of resistance levels. If LEND can break the 0.236 then the bullish movement will continue. If this occurred it would also turn the neutral indicators bullish. However if this cannot be broken, expect a downtrend to begin for LEND. The first bearish target for LEND is $0.27 USD, a 10% decrease in price from our current position. The first bullish target is $0.34 USD, a 10% increase from our current position.
This intelligence report is for marketing and educational purposes only. The views, analyses and projections are based on the independent research, but cannot be taken as a form of investment advice.
Originally published at https://blog.aax.com on August 3, 2020.
