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AAX Trends

AAX Intelligence: A Bullish Outlook for LTC & BTC

AAX Intelligence: A Bullish Outlook for LTC & BTC

News & Insights

01 Nov 2020

Below, we can see the EWs for LTC. Like BTC, LTC has recently broken positively from a symmetrical triangle.

LTC

Long-term viewpoint

Below, we can see the EWs for LTC. Like BTC, LTC has recently broken positively from a symmetrical triangle. This is bullish, with the move showing conviction, while fitting into the long term EWs movement.

LTC/ USD LT EWs

LTC has shown time movement suppression. This confirms that the symmetrical triangle is a legitimate formation. The move in the direction of breakout will likely be an extended move, seeing the LTC price possibly increase substantially.

LTC/USD Time

Short-term resistance and support levels

LTC has managed to successfully break above the $51 USD resistance level. With LTC following BTCs recent moves, the next aim for LTC could be the $64 USD resistance level. However, as mentioned, LTC currently has a high correlation with BTC. BTC falling could see LTC retest the $51 USD support level.

LTC/USD support/resistance

Potential H&S formation

LTC has recently seen the possible creation of an H&S formation. LTC would currently be within the right shoulder stage. However the effectiveness of H&S formations this year has been somewhat questionable.

If obeyed, the H&S formation would first see LTC head back towards $51 USD. If LTC then continued to follow, a drop towards the underlying green line (neckline) would see LTC hit around $44 USD.

LTC/USD H&S

Fractal agreement

With the H&S formation, the fractals are also in agreement, with the centre fractal line around the same price area as the $51 USD support line. A fall towards here from current prices would result in around a 5% loss. LTC has very much obeyed the fractals, acting as resistance as support multiple times. The centre line has numerous validation points, as demonstrated below.

LTC/USD fractals

LTC indicators

Indicator Bullish Bearish Neutral Note
BBs X Currently above the 20 day SMA, finding support with the SMA. Bullish.
Gann HL X Underneath the candles, currently blue and therefore bullish.
EFI X Has been on the way down with a little room to go, however little left towards the centre line. Therefore neutral.
MACD X Still has a positive crossover, albeit very close to seeing a bearish crossover. Still bullish.
MA ADX X Green and underneath the coin. Bullish.
SAR X Recent flip above the candle. Very bearish.
QQE MT4 X Recently saw a negative crossover. Bearish.
WWV X Has just turned red from green. Bearish.
PPs X LTC found resistance at the R1. Although it is still above the central PP so is therefore bullish.
Total 5 3 1

Indicators conclusion

In conclusion, the indicators are currently slightly bullish. However, many of the bullish indicators are very close to being bearish. Due to LTCs high BTC correlation, whether indicators stay bullish or bearish will likely be dependent on BTCs price action.

LTC conclusion

In conclusion, LTC is slightly bullish but appears to be heading towards $51 USD. Moving towards $51 USD on the whole would not be a bearish sign; moving down would see LTC lose around 5% of its current value.

LTC/USD indicators

LTC/USD indicators

BTC's long-term view

Below is the long-term chart for BTC.

BTC has seen positive growth so far in 2020, with BTC increasing from $7200 USD at the start of the year and now up to $13500 USD. This is almost 100% growth. BTC currently has two potential trajectory paths. The first is the angled support line, a part of the symmetrical triangle which BTC recently broke above.

This would see BTC retrace back towards $12000 USD, seeing gradual growth. Alternatively BTC will follow the curved path, in a similar fashion to 2017 and 2018. If the latter occurred then BTC will smash through the two upwards resistance levels, seeing tremendous growth. After this move BTC might see a heavy retracement as seen in 2017 and 2018.

BTC/USD long-term chart

Resistance levels

Below are a set of resistance / support levels and a table showing the strength of these levels, alongside the likelihood of these levels being hit.

Resistance level Likelihood of being hit again during BTC existence Strength / 5
$14000 USD Almost certain 3
$16000 USD Highly likely 2
$19000 USD Likely 1

As we can see from the resistance levels, they are becoming weaker. This is due to there being few points of contact - BTC has spent very little time over $12000 USD, failing to ever use $12000 USD as true support.

Therefore BTC is more likely to power through these resistance levels as they have previously offered very little resistance.

Support level Likelihood of being hit again during BTC existence Strength / 5
$4000 USD Extremely low - will likely take black swan event to hit level again 3
$6000 USD Extremely low 5
$9000 USD Medium 4
$10000 USD Medium / high 5
$12000 USD Highly likely 1

As we can see from the support levels it is highly unlikely that we will ever see BTC fall below $6000 USD ever again. This is due to the strength of the support levels ranging from $6000 - $10000 USD. If BTC is to fall below these levels it will likely be because of a black swan event occurring, as seen this year when all markets went into freefall due to COVID19.

BTC/USD

Why is this the case?

The reason behind this likely stems from two things. Firstly, overall knowledge of BTC has increased with the number of people (although still small) getting involved in BTC. Secondly, the halvings have been proven to have a profound effect on BTCs price. Each time a halving has occurred BTC has abandoned certain resistance levels due to the increasing scarcity of BTC.

Miners typically sell their BTC as soon as they receive it, increasing the overall supply. Leading us to the simple supply & demand concept. Miners are now receiving less BTC, with the halving's effect beginning to be seen. Alongside retail uptake, a growing interest from larger financial players has also been observed. From the monthly chart viewpoint, alongside the stockflow model BTC will not fall below $3000 USD.

BTC/USD Halving

Time periods

BTC has seen decreasing time gaps between major moves. After the halving in 2016, BTC went on a long bull run. Since this run, the length of the moves has been decreasing, as demonstrated below.

BTC/USD Time

Why are the time periods shortening?

The reason behind this is due to BTCs movement within this symmetrical triangle. As a cryptocurrency draws closer to the end of a triangle, volatility lowers. The moves become shorter because as discussed in previous reports, BTC has broken out of this triangle in a positive manner. This likely means that BTC will see an extended movement period, potentially seeing BTC return to ATHs by Q2 2021. With this statement supported by the halving factor.

BTC/USD EWs

BTC daily indicators

Indicator Bullish Bearish Neutral Note
Fractal Deviation Bands X Major resistance found, as indicated with the red arrow. Showing that BTC could potentially retest the fractal below, therefore bearish.
Gann HL X Currently blue and underneath BTC, therefore bullish.
BBs MACD X Currently green, however a move into the middle zone looks likely.
EFI X What goes up must come down. EFI looking like heading to the centre line, therefore seeing selling pressure on BTC. Bearish.
BBs X Currently above the 20 SMA, running on the top deviation. Therefore bullish.
SAR X Above the candles with a bearish flip taking place. Very bearish from the SAR.
MA ADX X Green, underneath the candles, therefore bullish.
MACD X Currently still has its bullish crossover. However Histogram is slowing down, showing signs of neutrality. On the whole, bullish.
WWV X Recently has turned from green to red, therefore bearish.
QQE MT4 X Bearish crossover, with yellow crossing under red. Therefore bearish.
KCs X BTC still running above the top deviation, therefore bullish.
Totals 5 5 1 50/50

Indicators table

Indicators conclusion

In conclusion the BTC indicators are currently neutral. With 5 bullish and 5 bearish indicators, alongside the single neutral one, there is a clear 50/50 split.

BTC conclusion

In the long term BTC is looking very bullish due to two main factors. Firstly is the positive breakout of the multi-year symmetrical triangle. Secondly is the BTC halving coming into effect, seeing BTCs supply lower. By the end of Q1 2021, if BTC continues as predicted ATHs should be reached.

BTC/USD Indicators

BTC/USD indicators

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