AAX Intelligence Report (Altcoin Special): 14 July, 2020 — AAX News & Insights

This report is also available in PDF-format

BTC price review

Bitcoin has continued to trade with little movement to show for since the last report, trading within the $8600 USD and $10000 USD region — as demonstrated below with the red lines:

The recent, continued lack of BTC movement has been overshadowed by the charts of many altcoins, with many showing bullish signals — some already making bullish moves, such as XLM and ADA. BTC’s lack of movement is even clearer on the 4hr chart with the BTC price ranging a tiny 4.75% since the last report.

Moving only within the $9450 — $9000 USD zone, this period of extremely low volatility means that BTC is likely gearing up for a big move, although the direction of this move remains somewhat unclear. The breakout levels from the last report continue to stand as before — it is unclear which direction BTC will move:

The $8350 and $10500 USD levels remain key towards the next price movement of BTC. If BTC moves into the upwards grey zone, then the continuation of the upwards trend is not confirmed. This was seen in January 2020 (it should be noted that the trading circumstances were different) when BTC broke $10000 USD with the sentiment online that a 2020 bull run had started; however, BTC clearly had different ideas.

BTC Conclusion

BTC is continuing to move sideways with no clear push towards any clear direction. Some may suggest that BTC has shown a recent descending wedge. This wedge which may have formed, however, is weak and lacks momentum.

This lack of momentum can be seen with a weak EFI push alongside a negative momentum SAR. The SAR can produce false momentum signals during sideways trading periods — lack of momentum and force in the break above suggests that this is a false trading pattern, and that the sideways movement will continue. There have also been multiple false formations so far, with a false symmetrical triangle formation and incorrect ascending triangle formation.

Altcoin TA reviews

Ethereum TA review

Many altcoins have been moving with great strides lately. Ethereum has not been one of the larger movers with a 6% gain over the past week; however, the current charts are suggesting that a positive move could be just around the corner.

Ethereum, like BTC, is currently trading within a range and has been doing so for 43 days. ETH has been trading within $220 and $250 USD, a more significant trading range at 13% compared to BTC’s recent 4.75% trading range.

Before ETH started to trade within this channel, ETH was trading within a pitchfork.

This pitchfork was clearly followed between March 16th — June 15th seeing ETH rise by 115%. The move upwards appears to be an impulsive one, with the current trading zone a clear attempted retracement.

ETH has attempted to retrace a couple of times towards the 0.236 Fibonacci level, although ETH appears unwilling to fall below the 0.236 Fibonacci retracement. This shows signs of a potentially positive movement, alongside the short-term trading channel, which has just been broken as shown below:

With the channel broken, preventing a test of the 0.236 Fibonacci retracement, this points towards a bullish scenario.

ETH MACD

The Ethereum MACD is currently giving a bullish signal with its positive crossover in the neutral zone (around 0); if it can maintain its positive momentum, it could lift ETH out of its current sideways trading zone and back to the positive price action seen before June.

ETH Ichimoku

The Ichimoku indicator is looking bullish as well as the MACD. The candles are above the cloud, while the cloud is also green. If the price can remain above the cloud, then the sentiment from the cloud will remain bullish.

ETH targets

Like BTC, ETH is currently reliant on one of two levels to be broken in order to indicate the next trend direction, due to it trading within two significant regions. Depending on which level is broken will also have great effect on the market movement as a whole — with many cryptocurrencies closely following ETH.

Looking at the ETH/USD TA, it appears that ETH is more likely to move towards the upside rather than downwards. This would result in R1 being broken with the next level of resistance being $275 USD. Meeting this would result in a 15% gain; however, if ETH decides to break below $223 USD, the downside target is $214. A move down towards $214 would see ETH lose almost -10% from its current value.

Ethereum 2.0 is said to be released this year, moving from PoW towards a PoS system alongside claims of vastly improved scalability through sharding. The new systems, aimed to be put in place by the end of 2020, will make the potential use cases of Ethereum even more favorable. Therefore, speculation could lead to another ETH bull run, carrying with it numerous altcoins.

Ethereum Classic (ETC)

Ethereum Classic is looking very exciting and could be the next cryptocurrency to surge in the coming weeks. There has been the formation of a descending wedge with a breakout — it has conviction behind it and appears to want to rise further. Numerous indicators are also bullish alongside this wedge.

Bullish MACD

The MACD has seen a clear downwards trend. Now there has been a positive crossover in the negative area — this is an extremely bullish signal.

Bullish descending wedge

The wedge which has formed has formed over a period of 36 days, with many points of validation on both sides of the triangle. Alongside this the breakout has also been significant, meaning that the breakout is likely here to stay and that we will not see ETC break back into the triangle or below $5.5 USD.

Bullish SAR alongside potentially bullish Ichimoku

The SAR is currently underneath the price of ETC. There is also a significant distance between the SAR and the candles.

If the SAR is able to have a slight red Heikin Ashi momentum gathering retrace without the SAR flipping — this would be a majorly bullish signal. The momentum from the SAR could potentially lift ETC above the Ichimoku cloud, which again would point towards further bullish movement.

The SAR alongside the descending triangle, bullish MACD and green Heikin Ashi candles, all together point towards a bullish scenario playing out.

Conclusion

ETC is looking extremely bullish with the first target being $7.5 USD (16% rise from current position). After this, the next upwards target is $8.3 USD which is definitely achievable and would result in a 30% gain from our current position. The bullish scenario will not play out if ETC breaks below $5.6 USD. If $5.6 is broken, then a bearish move down below will likely send ETC back to yearly lows down to around $4.5 USD; however, due to the bullish factors mentioned previously, it would be unlikely that the bearish scenario will occur.

BTC hard fork alt reviews

BCH TA

Bitcoin Cash (BCH) has been one of the poorest performing altcoins since mid-March, seeing the cryptocurrency make very little gains, despite the BCH halving occurring shortly before BTCs.

BCH, like BTC, is trading within a small range; however, compared to BTC, this range is over a longer time period (114 days) and has not followed an impulsive move. BCH is stuck within the 0.236 and 0.382 Fibonacci retracement levels. Once again, the direction of the next trend depends on the direction of the breakout. The BB suppression, along with the PPs (Pivot Points) suppression, indicates that the next move will be a large one. If BCH breaks $270 USD then the next target to the upside will be $315 USD. From our current position, a move to $315 would result in a 33% gain. If the move to the upside surpasses this, then we could see BCH soar to $360, although the likelihood of a move to either the up or downside in the near future appears unlikely.

BSV TA

Like BCH, there is very little to report about BSV. BSV has performed very poorly in comparison to other cryptocurrencies since the March meltdown. BSV is currently down -60% from its ATHs earlier this year, and is currently sitting at $181 USD, trading within the $220 — $150 USD zone.

Within this zone there are seemingly two parts: Part one is the upper region between $180 USD and $220 USD. Part two is between $180 and $150 USD. $180 USD has acted as both support and resistance multiple times as BSV moves around within this trading zone. It appears that in the short term at least, BSV will remain in zone one. This is due to BSV being in the upper regions of the BBs alongside a positive SAR (with a good amount of momentum). If BSV can maintain a gap above the SAR it will reach $220 USD in the near future, although whether BSV can break out of this trading region is another question. If the $200 is broken, then the next target is $320 USD. If a downside break of region 2 happens instead, then the next stop for BSV will likely be $105 USD.

BSV conclusion

Bitcoin forked altcoins have performed very poorly recently — this also includes LTC. There are a couple of reasons which may be behind this. The first is that many of the people who invest in BTC forked altcoins would likely have been aware of the halving, moving their holdings from BSV/BCH/LTC towards BTC. Secondly, the technology behind these altcoins is somewhat outdated, particularly BSV. Alternatively, investors have turned to new types of altcoins with non-PoW blockchains, such as, IOTA/NPXS/NEO/ADA.

XRP TA

XRP has a chart which looks extremely similar to ETC; a descending triangle which has formed has recently been broken out of in a positive direction:

Like ETC, the triangle has been broken out with significance. XRP has had a poor 2020 in comparison to other cryptocurrencies — this is on the back of an extremely poor 2019. In the short term however, XRP is looking bullish. Many indicators are pointing towards bullish movement in the short / medium term.

Conclusion

If XRP can break above $0.20 USD this would then see it rise above the Ichimoku and the resistance line which is holding it back. After this, XRP would then likely see 0.25 USD — this price level is crucial and will determine whether the move up (stemming from March) is impulsive or corrective. If it is corrective, this could be very bad news for long term XRP holders, although if it is impulsive, further price gains will be on the way in 2020. An upwards move will not occur if $0.17 USD is broken significantly below. If $0.17 is broken below, then a move to yearly lows is highly likely and would see XRP hit $0.14 again, resulting in a 27% loss from our current position.

KNC TA

KNC has seen huge growth since the start of the year, increasing a huge 770% from January 1st at $0.185 to its current price of $1.63 USD. So, will KNC see continued growth or will it retrace / make a move back down due to its prices being potentially inflated?

The Kyber network team has created an on-chain liquidity protocol. This protocol can then be implemented into an application allowing for the exchange of tokens without any third parties. Currently, only ERC-20 tokens are available on the Kyber Swap, a service provided by the Kyber Network.

What the team is doing is highly impressive and is changing the way that online companies think about cryptocurrencies. Currently, one of the problems with cryptocurrencies is that there are too many of them; however, the Kyber Network allows for websites to integrate a token exchange straight onto their site. Therefore, if I want to buy a book online, although I do not have the desired cryptocurrency for the site — Ethereum (ETH), as I only have PowerLegder (POWR) — I could instantly exchange the coins on the site and pay.

With the current systems in place, I would have to go onto a separate site, exchange my coins into my wallet, go back onto the site and go through the process of buying the book again. The interest in KNC has been clear to see with the growth of the cryptocurrency and increased liquidity available on the Kyber Network. KNC has had a good year so far, although it is still over 65% down from its ATHs back in 2018 ($6 USD).

It appears with KNC that there will likely be a small period of low volatility, with the potential for a slight pullback. These low volatility periods are indicated by the blue squares:

This slight pullback would likely see KNC test the median line of the BBs with the RSI falling to 50. What KNC will do after that is key towards indicating where the coin will move next. If KNC falls below the median line, tests it and fails to break above, then that would be a majorly bearish signal. It would also likely see the RSI fall below 50, which would indicate that there is more selling pressure than buying interest. This could then see KNC fall below the Ichimoku cloud and fall to around $0.8 USD; however, if KNC stays above the BB median line during its period of volatility, above the Ichimoku and maintains its RSI>50 then the price could well reach $2.60 by August.

ADA TA

ADA, like KNC, is another cryptocurrency which has seen exponential growth since the start of the year.

Starting the year at $0.032 USD, ADA now sits at $0.12 USD; however, will this significant growth continue, or slow down with a potential retracement?

Currently, ADA has no reason to reverse. ADA is above the Keltner Channels (KC) and has a positive SAR, alongside a positive MACD; however, due to the huge growth seen in recent weeks, ADA may need to catch its breath before another push upwards. This could see ADA test the median line of the KCs in a similar fashion to mid-June. If this occurs, ADA could see a small decrease in the coming days, although major losses are currently looking unlikely.

If this retracement towards the median line occurs it would see ADA likely move down towards $0.11 USD. If the bullish momentum continues after this, the next level of major resistance is $0.16 USD, this would likely be tested — this would result in a 32% gain from ADA’s current position.

LINK TA

ChainLink is one of the most sought after cryptocurrencies, currently with prices at ATHs. The growth of LINK has been huge and is currently up nearly 300% since the start of year prices. As shown in the chart below, LINK currently appears unstoppable:

Due to the very high RSI ( x<80), taking a position on LINK appears risky. Looking at historical LINK data, when the RSI hits the extremely overbought level over 80, the coins reaction is severe, both upwards and downwards (as indicated below). There have been occasions, such as April 2019, June 2019 and Oct 2019, when as soon as the RSI has reached 85, the LINK price has then plummeted.

LINK scenarios

The bullish scenario would see LINK continue its upwards movement towards the R4 PP (Pivot Point). This would represent an 11% gain and see LINK break the $7 USD barrier.

The bearish scenario would see LINK head towards the median line of the BBs as the overpurchsing, as seen on the RSI, becomes too much. It would see LINK take a retracement towards the R1 section of the PPs. This would see LINK lose -21%, and fall back towards $5 USD; however, if this does occur, this does not mean that LINK is looking long term bearish.

AAB TA

Last week, in the AAX Intelligence report, it was stated that $0.15 USD would likely provide support for AAB and that has been the case this week with AAB unable to break below the $0.15 support.

As seen above, the $0.15 level has provided support numerous times for AAB — preventing the price from falling further.

AAB conclusion

The direction of AAB depends on which resistance level is broken after this period of sideways trading. If AAB breaks above $0.24 USD, then the pullback will be underway, seeing AAB recover some of its losses from the AAB sell off; however, if $0.15 USD is broken below, then AAB will likely meet $0.10 USD next.

International business news

• The United States has bought up nearly the entire global supply of the drug, Remdesivir. The drug was the first to be approved by the US authorities to treat COVID-19. The US has bought 140,000 doses, which is all of Gilead’s current supply, and 100% of production in July, and 90% of production in August and September. The stock price of GILEAD has been relatively unaffected by the news.

• Social media platform TikTok has had a particularly tough week, with TikTok halting access in Hong Kong after recent security laws passed. Amazon sent out an email in error telling all employees to delete TikTok over security concerns. Finally, TikTok have had to remove 49 million videos on the platform after concerns of videos breaking the nudity / sexual acts rules.
• Sony have purchased a 1.4% stake in Epic Games costing the company $250 million USD. Epic Games are the creators of the popular games: Fortnite, Gears of War, and the lockdown sensation, Houseparty.
• BooHoo have faced negative allegations regarding the working conditions and pay in their factories. It has been reported that people working in the UK’s factories for BooHoo have been paid as little as $4.40 USD per hour. While the UK minimum wage for people over the age of 25 is $11 USD per hour. The share price of BooHoo reacted negatively, as shown below:

• The UK has announced a $889 million USD fund for British borders. The fund comes due to the UK leaving the customs union of the EU at the EoY. This money will go towards infrastructure, IT systems, recruitment, and other areas.

Cryptocurrency news

• Cryptocurrency exchange Cashaa has been hacked. The hackers managed to steal 336 Bitcoin from one of the exchange’s wallets. It is believed that the hack was from India, although little else has been released. The amount stolen equates to approximately $3 million USD.
• Volvo has made an investment into the blockchain technology company Circular. Circular have been working with Volvo in order to increase the traceability of the Cobalt used in the batteries of the Volvo electric cars. This shows a major step forward for Volvo, and the supply chain aspect of the business.
• DOGE saw a surge in recent days due to the cryptocurrency going viral on TikTok. It saw DOGE increase 150% in three days — although the mini bull run for DOGE appears over, with DOGE losing 36% of its value from its weekly high; however, the recent run has demonstrated the power of social media and the impact it can have on cryptocurrency prices.
• Lots of hype has surrounded Ethereum, and ETH2.0, in recent months; however, a cryptocurrency which is quietly working towards its vision with great speed is IOTA. IOTA have created Pollen, a decentralised test net for IOTA2.0. The new Pollen feature will allow for the tokenization of assets, allowing for coloured IOTA tokens. These tokens will allow for real world assets to be tokenized.

This external intelligence report was written by Oliver Page, and commissioned by AAX, for marketing and educational purposes only. The views, analyses and projections are based on the author’s independent research. The report should not be taken as a form of investment advice.

Originally published at https://blog.aax.com on July 14, 2020.