AAX Intelligence: Bitcoin, Ethereum, AAB — AAX News & Insights

BTC price movements since the last report.

Since the last report BTC has had a volatile time seeing it sit in a trading range of 8%. The weekly high was just shy of $12100 USD, while the weekly low was $11100 USD.

Overall however it has been a quiet week for long term BTC hodlers with the crypto moving a measly -1.5%.

During BTCs weekly movement it has shifted in two waves as demonstrated below.

The second wave appears to be a correction of the first wave. Due to BTC being unable to break above the crucial 0.5 Fibonacci retracement, it is now suggesting that BTC will likely have a short term downwards trend — unless this is broken.

If this occurs then it is likely that BTC will subsequently form a descending triangle, it would likely look similar to the triangle below.

There are already multiple validation points to support the formation of this triangle. These validation points can be found on both the descending resistance and the flat support. As to whether the descending triangle is bullish or bearish, it depends on the direction of the breakout.

Now that we have taken a look at the potential short term formations, what are the long term formations?

Symmetrical triangle positive breakout

There is good news in regards to the long term direction of BTC. Over the past few months BTC has broken positively out of a symmetrical triangle. This triangle had numerous points of validation.

The breakout above the symmetrical triangle was confirmed when the monthly candle closed above the triangle, alongside the downwards resistance acting as support for BTC.

A positive breakout of the triangle points towards further price increase, although just how far is uncertain. It would be likely that BTC would see a 100% Fibonacci retracement, meaning that BTC could see ATHs again before the EOY.

However if BTC does want to see ATHs again, it would firstly need to go through the $12250 USD resistance level — 0.382 Fibonacci level. The 0.382 has acted as resistance multiple times, most notably in mid 2019.

Conclusion

On the long term outlook, it will be interesting to see whether BTC can break the 0.382 level. The positive breakout of the symmetrical triangle should be met with excitement. BTC could reach ATHs again, which would likely put cryptocurrencies back into the media spotlight. A return to ATHs would represent a 70% gain from our current position.

BTC medium term outlook.

On the medium term, like the long term, BTC also has some huge price barriers to break through, with another similarity being that it is the $12250 USD resistance level.

BTC/USD trend based fib extension

When looking at BTC on the weekly chart, it has very clearly been moving in and out of the trend based Fibonacci extension. The points where the trend based Fib has acted as support and resistance have been marked above. Due to the accuracy so far of the trend based Fib for finding the support and resistance levels, I am quite certain that the 0.786 trend based Fib will provide a major barrier towards BTC pushing further up for a 100% retracement.

BTC weekly indicators

When using the longer charts, indicators generally become less accurate; especially momentum indicators. However there are three which still work very well. These are the Heikin Ashi candles, the PnF chart and the SAR Parabolic.

Heikin Ashi candles — The Heikin Ashi candles are currently bullish. They have seen a prolonged period of green, with a slight pull back in late June when BTC saw a healthy retracement. We are currently within the 3rd wave, with this wave looking impulsive the Heikin Ashi candles are supporting the suggestion that there will be continued upwards movement over the coming months.

PnF — Like the Heikin Ashi, the PnF is also bullish. The PnF has recently seen a buy suggestion triggered. The indicator is also currently seeing green candles alongside the cloud itself being green and the buy signal. During the retracement period the PnF remained positive. This indicator is currently extremely bullish on the weekly candles.

SAR — Finally we will have a look at the SAR. Like the other two indicators the SAR is currently bullish. On the 20th of April BTC saw the SAR flip, the momentum switching from bearish to bullish. This momentum has then been carrying BTC towards further price gains. With the gap between the candles and the SAR still huge, the suggestion from the SAR is that BTC will continue to move further up.

BTC medium term conclusion

Like the long term BTC is looking bullish on the medium chart. BTC looks likely to break through the $12000 USD resistance level and is being carried by multiple indicators. After $12000 USD the next resistance level is $13500 USD, this would be a 15% rise from our current position. We are beginning to explore uncharted resistance levels. As BTC approaches ATHs the pivot points indicator will become very useful for identifying future resistance levels, alongside the trend based Fibonacci extension.

ETHEREUM

ETH long term charts

From 2018 to the start of 2020 ETH had been stuck in a cycle of losing tremendous amounts of value in a descending triangle before seeing a slight retracement.

As shown above here, over the course of 2018 ETH had a descending triangle formation from June all the way until December. There was then a retracement to the 0.382 Fibonacci retracement. The move was not impulsive as demonstrated below and led to the next descending triangle formation.

The second descending triangle formed over a smaller period of time and saw a higher retracement than the triangle before. While the first retracement saw ETH hit the 0.382 Fibonacci retracement, the second had ETH hit the 0.618. However, it could not break through the 0.618 and saw another major sell — off. This sell off saw ETH fall below $100 USD for the first time since February 2019.

ETH/USD descending triangle, failed attempt to push a 100% retracement.

From this low of sub $100 USD ETH then saw itself push for a bullish move. This leads us to where we are currently, with ETH surging 360% from its March low to the current price of $415 USD.

Rather than get stuck at the 0.786 or 0.618 Fibonacci retracement levels, ETH has pushed all the way towards the 1.618 in what is a hugely impulsive move.

Many cryptocurrency traders have varying reasons for this impulsive move. There is a split between those who analyse fundamentals and those who purely analyse the charts. Chartists believe that ETH has made huge strides due to the TA, alongside ETHs ability to overcome the 0.618 and 0.786 Fibonacci levels. Meanwhile fundamentalists believe that these moves are due to the soon to be released ETH2.0.

The huge move appears to be a combination of the two factors. The opportunities which ETH2.0 offers, the potential fulfillment of what Ethereum can do in the near future. Alongside tired bears from continued selling, and a huge influx of investment into the cryptocurrency market of recent.

Formations

ETH has seen a broadening formation in recent months, with this has come increased volatility. The increase in volatility provides some great opportunities, however the increase in volatility can also increase the risk.

The broadening formation is positive and is moving in an upwards direction. This formation is therefore bullish. A break above the formation would point towards a new cryptocurrency explosion, similar to the one seen in 2017/18. The potential downside to this is that it could create another cryptocurrency ‘bubble’. The broadening formation can offer swing trading opportunities, providing that ETH continues to trade within the formation. A clear break above or below the formation will act as invalidation.

ETH indicators

The first indicator which we are going to have a look at is the PnF indicator. With this indicator there is big news! It has turned bullish for the first time in 924 days. The change from a red cloud to a green cloud helps to back the bullish sentiment surrounding ETH in recent months. It also bodes well for making sure ETH does not fall out of the broadening pattern which it is currently in.

The second indicator is the SAR. Like the PnF the SAR is extremely bullish. There is a huge gap between the candles and the indicator.

Finally let’s look at the Keltner Channels (KCs). The KCs are currently bullish, however looking at historical data it is possible that ETH could be due a retracement. If a retracement occurs however ETH should remain bullish. There have been five times of ETH overextensions on the charts. The purple times saw ETH loose major value, head towards the centre line. After that rather than using the centre line as a channel, ETH fell below and saw continued selling. However in the green examples ETH headed back towards the centreline and used the centre as a support before propelling itself even higher. Due to the points made earlier and ETHs move having impulsive characteristics, it appears more likely that the green rather than purple scenario would occur.

ETH conclusion

ETH appears due a retracement. It is currently within the upper part of the broadening channel and is overextended on the KCs. However the retracement which would occur should maintain ETHs bullish sentiment, allowing cryptocurrency users to potentially ‘buy the dip’. The retracement (if it occurs) should present a great buying opportunity for ETH.

AAX Token (AAB)

Since AABs introduction to the market at $1.0 USD the cryptocurrency has lost significant value — around a 64% loss from our current position. AAB did find a high of $1.7 USD during this time, although since the ATH was found it has generally been a sea of red candles.

The cryptocurrency has so far moved in four stages:

  • The first stage saw AAB have a mini bull run, going from $1.0 USD towards $1.7 USD.
  • From there we had the second stage, the losses stage. This saw AAB fall from $1.7 USD to $0.15 USD, losing 91% of its value
  • Then there was the third The third stage was a period of stagnation, seeing AAB trade within $0.13 to $0.18 USD from the 25th of June to the 10th of August

Now we are approaching a potential stage four… Stage four has all the possibility to be a new bull run, catching on with the huge positive moves which have been seen across the cryptocurrency market. This has been triggered by some huge moves of recent by AAB, seeing the cryptocurrency increase from $0.21 USD to $0.38 USD in the space of 24 hours.

AAB conclusion

With the AAX user base rapidly expanding, alongside the positive moves being made in the cryptocurrency industry recently AAB could be a good potential holding. If AAB is in the fourth zone then the huge sell off seen in stage two should be over.

Originally published at https://blog.aax.com on August 17, 2020.

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