AAX Intelligence: BTC, ETH & LINK — AAX News & Insights

This report is also available in PDF-format.

Bitcoin Wyckoff Review

In last week’s analysis we ran through BTC’s potential Wyckoff distribution stage. Looking through the basics of Wyckoff market cycles while analysing the potential cycle which is occurring, as demonstrated below. Showing that BTC could be potentially overbought. If you haven’t read last week’s report here is the link.

During this report it was stated that BTC could see an imminent drop, that BTC was showing signs of weakness — it would only be a matter of time until the BTC price fell from a cliff.

However, Bitcoin has had a surprising rally over the past few days, seeing BTC increase from just over $9000 USD pushing towards $9600 USD. This represented a 6.51% gain over a 7 day period. Although is this push an exit plan for the larger players — allowing them to set up a trap? Or is it the start of a new BTC bullish trend?

BTC recent formations and movement

BTC has recently formed a descending triangle. From this BTC then proceeded to have a bullish breakout as shown below.

This triangle formed over a 12 day period before a positive breakout occurred. The breakout saw BTC hit the 0.618 Fibonacci retracement from the tip of the triangle — shown below.

BTC failed to make a significant move above the 0.618 Fibonacci level, seeing BTC fall from around $9500 USD to almost $9000 USD — the pre break out price. After this period BTC traded sideways, as demonstrated with the BB (Bollinger Bands) and BBW (Bollinger Bands Width).

Following this period, BTC proceeded break out positively, with the price testing the upper regions of the BBs numerous times.

Will this bullish movement maintain?

Currently many of the indicators are bullish on the 4hr chart:

  • SAR parabolic — Price is above the SAR with no current appearance of a slowdown — BULLISH
  • Ichimoku — Price is above the cloud with the cloud also currently green — BULLISH
  • BB/MACD — Green cloud — BULLISH

We should note that the RSI is at an extremely high level, meaning that a small retracement is likely. If BTC can use the 20 MA (centre line) from the BB as support, allowing for the RSI to recover then this would point towards questions of the Wyckoff analysis indicating the LPSY too early. On the other hand, if BTC is not supported by the centre line and proceeds to touch the lower band, then this would be a huge bearish indicator — suggesting that a major reversal from the previous uptrend from March is in place. Therefore maintaining the current Wyckoff analysis.

BTC/USD price levels

The first bullish target for BTC would be $10000 USD, this would majorly increase the likelihood of a bullish run from our current position and would represent a 4% gain.

The second bullish target for BTC would be $10250 USD. If this price was broken above, then the recent Wyckoff analysis would be invalidated. This would represent a 6.25% gain.

The first bearish target would be a break below $9000 USD. A break below this would represent a 6.25% loss, a drop here would majorly increase the likelihood of a major breakdown in price.

The second bearish target would be $8620 USD. A fall below this level would certify the new bearish price wave, representing a 10% loss from BTCs current position.

Ethereum

ETH Fibonacci

ETH has seen major growth over recent days, finally breaking through the 0.786 Fibonacci level which had been holding ETH back for 52 days. ETH had tested the 0.786 level multiple times over this period — as indicated with the blue arrows.

Mini-Rally, fundamentals

One of the suggested reasons why this mini rally has taken place, was because of the soon to be released ETH2.0. With the new ETH event set to take place by the end of 2020, the cryptocurrency community is getting excited over the new possibilities which ETH2.0 offers. One of the main features of ETH2.0 is increased scalability.
Scalability is still a significant issue for Ethereum, with major network issues occurring during the ETH bull run in 2017/2018. However, the new updates for ETH which have been in the works for years are said to solve this problem through ETH sharing.

Ethereum benefits for businesses:

Permission or permissionless networks — Ethereum allows for private and public networks.

Data coordination — through the use of a decentralised network, it allows businesses to increase data coordination — removing the need for expensive central servers.

Tokenization of assets — allowing businesses to increase their target audience size

The implementation of ETH2.0 should increase the adoption and viability of these options. Therefore, looking at the fundamentals, this is the reason behind ETHs increased price gain. However, the recent spike which has occurred recently is not due to some major ETH news, as can be demonstrated with the charts.

ETH ascending triangle

As can be demonstrated above, ETH broke positively out of an ascending triangle formation. This formation had formed over 72 days and has numerous points of contact — increasing the validation of the triangle.

Due to the formation length and size of the breakout it is extremely likely that ETH will see a 100% Fibonacci retracement, this will see ETH hit $290 USD. A move to $290 USD would be a 5.55% increase from our current position.

ETH indicators

In conclusion, we can clearly see that ETH is currently bullish. This is because all of the above indicators are currently bullish — very few showing signs of slowing down.

ETH price targets

Bullish targets

The first bullish price target would see ETH hit the 100% Fibonacci retracement level. This would be $289 USD, around a 5% gain from our current position. The likelihood of this occurring is high, as shown with the indicators and formations mentioned — although in cryptocurrencies nothing is certain.

The second bullish price target is 318USD. For this to occur ETH would need to break the 1.0 Fibonacci level, which will likely be met with firm resistance. A move to this level would represent a 14% gain.

Bearish targets

The first bearish target is $246 USD. This would be a simple retracement to test the 0.786 support. A move down to $246 is definitely possible although would go against the current ETH indicators. This move would represent a 11% loss from the current position.

The second bearish target is $220 USD. The likelihood of this occurring is very low, it goes against the indicators and formations. However a move down to $220 USD would be a 20% loss. It would see ETH enter back into its previous trading range.

LINK

Review of last week’s analysis

In last week’s analysis it was said that the current trend is bullish, however a healthy retracement towards the 20 MA of the BBs would be likely. This retracement while maintaining the bullish momentum is what happened.

LINK suffered a 22% loss from its ATHs of nearly $9USD, heading back to $7 USD. However as mentioned in the last report, this does not mean that LINK is no longer bullish.

Bullish/Bearish indicators

Conclusion

As shown with the table above, many of the indicators from last week have turned bearish. However, it is also important to note that LINK has met resistance at $7.2 USD. There is a balance between bullish and bearish indicators; it appears though currently LINK is leaning towards a continuation of the bullish move — or at least a sideways trading period instead of an immediate downturn.

Business review

Brexit talks stalling — Brexit talks between the EU and the UK continued this week. It was reported that significant progress did not occur, with major differences seen over the British-fishing waters and regulations on businesses. The EU set the date October 15th 2020 as the summit for an agreement between the UK and EU to occur. The EU is currently under huge pressure, with many countries within it facing increasing GDP/Debt ratios. There are tensions around a so-called Italexit (Italian Exit of the EU).

Gold surge — Gold prices are nearing the ATHs seen in 2011. Gold is currently valued at $1865 USD, with a huge increase in price since the lows of 2016. Demand for gold has increased due to the asset acting as a safe haven.

Equity markets — The US S&P 500 has made significant strides during June, surpassing the 3200 mark. Whereas the UKs FTSE 100 has stalled, likely due to economic worries of the UK alongside stalling Brexit talks — further decreasing confidence in the UK economy. In Europe, the EURO 300 index has seen a moderate recovery, returning to the 1440 levels of May.

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 July 27, 2020.

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