AAX Research Report: BTC and ETH
BTC price trend
Since the last report, the BTC price has fluctuated within an 8% range for some time. The highest price for the week was close to $12,100, while the lowest price for the week was $11,100.
BTC/USD
But it has been a fairly quiet week overall for long-term holders of BTC, with price fluctuations of just -1.5%.
Judging from the weekly price trend of BTC, it has two band changes, as shown below:
BTC/USD
The second wave appears to be a correction to the first wave. The inability of BTC to break through the key 0.5 Fibonacci retracement level means that BTC is likely to have a short-term downtrend - unless this retracement level is broken.
BTC/USD Fibonacci Retracement
If this happens, BTC will likely then form a descending triangle that looks similar to the chart below:
BTC/USD descending triangle
There are already multiple points of validation supporting the formation of this triangle. These validation points can be found on both descending resistance and flat support. As for whether this descending triangle is bullish or bearish, it depends on the direction of the breakthrough.
BTC/USD Potential Descending Triangle
Now that we see the underlying short-term shape, what does the long-term shape look like?
Symmetrical triangle positive breakout
As for the long-term trend of BTC, it is still favorable. Over the past few months, BTC has aggressively stepped out of a symmetrical triangle. This triangle has many verification points.
BTC/USD Symmetrical Triangle
When the monthly K-line chart closes above the triangle, the symmetrical triangle is breaking through, while the downward resistance also acts as support for BTC.
A positive breakout points to a further increase in price, but the exact amount is uncertain. BTC is very likely to see a 100% Fibonacci retracement, which means that BTC may reach its all-time high price again before the end of the year.
BTC/USD Fibonacci levels
However, if BTC wants to see all-time highs again, it first needs to break through the $12,250 resistance level - the 0.382 Fibonacci level. 0.382 has acted as resistance on several occasions, especially in 2019.
in conclusion
in conclusion
In the longer term, it will be interesting to see if BTC can break above the 0.382 level. A positive breakout of the symmetrical triangle should get the market excited, BTC could reach all-time high prices again, and it could bring cryptocurrencies back into the media spotlight. A return to the all-time high price would represent a 70% gain from our current position.
BTC medium-term trend outlook
In the medium term as well as in the long term, BTC has some massive price resistance to break through, also at $12,250.
BTC/USD trend based on Fibonacci extensions
Looking at the weekly chart, BTC's in and out trends are very clearly based on Fibonacci extensions. The points of support and resistance based on the Fibonacci extension trend have been marked above. Due to how accurate Fibonacci-based trends have been at finding support and resistance levels so far, I am pretty sure that a Fibonacci-based trend at 0.786 will provide a major hurdle for BTC to push further higher 100% retracement level.
BTC weekly indicator
Indicators generally become less accurate when using longer charts; especially momentum indicators. However, there are three indicators that are still very useful. They are Heikin Ashi Candlesticks, PnF and SAR Parabola.
BTC/USD Indicators – Heikin Ashi candles, PnF & SAR Parabolica.
Heikin Ashi Candlesticks - The Heikin Ashi candlesticks are currently bullish. It can be seen from the figure that there is a long positive line, and there was a slight pullback when BTC experienced a benign correction in late June. We are currently in wave 3, which looks aggressive, and the Heikin Ashi candle supports the expectation that BTC will continue to rise in the next few months.
Heikin Ashi – BTC/USD
PnF -- Like Heikin Ashi, PnF is also bullish. PnF recently triggered a buy recommendation. The indicator is also currently showing green candles, while the cloud itself is green, also a buy signal. During the pullback, PnF remains positive. The indicator is currently extremely bullish on a weekly basis.
BTC/USD PnF chart
SAR -- Finally we look at SAR. Like the other two indicators, the SAR is currently bullish. On April 20, the BTC SAR flipped and the momentum changed from bearish to bullish. Subsequently, this momentum has been pushing the BTC price further higher. As the gap between the candlestick chart and the SAR is still wide, the SAR indicator shows that BTC will continue to rise further.
BTC/USD SAR
BTC mid-term trend conclusion
The BTC medium term is as bullish as the long term. BTC has the potential to break through the $12,000 resistance and is supported by multiple indicators. After $12,000, the next level of resistance is $13,500, which would represent a 15% gain from where we are currently. Unknown resistance levels will be explored next. Along with trend-based Fibonacci extensions, the Pivot Point indicator will be a very useful indicator for identifying future resistance levels as BTC prices approach all-time highs.
ETH
ETH long-term chart
From 2018 to the start of 2020, ETH was in a descending triangle with huge losses before a minor pullback.
Descending triangle before ETH/USD pullback
As shown in the figure above, ETH was in a descending triangle form from June 2018 to December. It then pulled back to the 0.382 Fibonacci retracement level. As the chart below shows, the move was not impulsive and led to the formation of the next descending triangle.
ETH/USD second descending triangle
The second descending triangle was formed for a shorter period of time, and there was a higher retracement than the previous triangle. ETH hit the 0.382 Fibonacci retracement level on the first pullback and 0.618 on the second pullback. However, ETH failed to break through 0.618 in the end and suffered a big sell-off. The sell-off sent ETH below $100 for the first time since February 2019.
ETH/USD descending triangle, 100% retracement failed
From price lows below $100, ETH started to skyrocket. From the low point in March to the current $415, it has skyrocketed 360%.
ETH did not stop at the 0.786 or 0.618 Fibonacci retracement level, but pushed all the way to 1.618, which is a very aggressive trend.
ETH/USDETH/USD heads towards 1.618 Fibonacci retracement level
Cryptocurrency investors have different reasons for this price surge. There is a divide between those who analyze fundamentals and those who purely analyze charts. Chartists believe that the reason for ETH's huge progress is from a technical analysis point of view, while ETH was able to overcome the 0.618 and 0.786 Fibonacci levels. Fundamentalists believe that these moves are due to the upcoming release of ETH 2.0.
The big move appears to be a combination of these two factors. The opportunities provided by ETH2.0, the prospects that Ethereum can achieve in the near future. In addition to the exhausted bear market brought on by the continuous sell-off, and the recent influx of investment into the cryptocurrency market.
form
ETH/USD trumpet pattern
ETH has formed a trumpet pattern in recent months, and with it, increased volatility. Increased volatility presents great opportunities, but also increases risk.
ETH/USD trumpet pattern
A trumpet pattern is positive and is trending upward. Therefore, this pattern is bullish. A breakout of this formation would point to a new cryptocurrency pump similar to what happened in 2017/18. Potential downside is that this could create another cryptocurrency"Foam". The trumpet pattern can provide a swing trading opportunity, provided ETH continues to trade within the pattern. Clear breakouts above or below the pattern are invalid.
Ethereum Price Indicator
The first indicator we'll look at is the PnF indicator. Major positive for this indicator! It turned bullish for the first time in 924 days. The change from red cloud to green cloud has helped support the bullish sentiment surrounding ETH in recent months. This also indicates that ETH will not fall out of the current trumpet shape.
ETH/USD PnF
The second indicator is SAR. Like PnF, SAR is also very bullish. There is a huge space between the candlestick and the indicator.
ETH/USD SAR
Finally we look at Keltner Channels (KC). KC is currently bullish, but from historical data, ETH may experience a pullback. However, even if the pullback occurs, ETH will continue to be bullish. On the chart, ETH has been overextended five times. When it is purple, ETH has seen a major value loosening, heading towards the center line. Afterwards, instead of using the centerline as a channel, ETH dropped below and sustained selling. However, in the green example, ETH has returned to the centerline and used the centerline as support, propelling itself further up. Due to the points made earlier and the impulsive nature of ETH's movements, a green scenario seems more likely than a purple one.
ETH/USD KC Overextended
ETH price action conclusion
ETH may pull back. It is currently in the upper part of the flare and overextended on the KC. However, the impending pullback should sustain the bullish sentiment on ETH, giving cryptocurrency users the possibility to"buy dip"AAX is a digital asset exchange powered by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.
*This research report is for marketing and educational purposes only. Opinions, analyzes and forecasts are based on independent research and do not constitute investment advice.
About AAX Academy
AAX is a digital asset exchange powered by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.
