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AAX Trends

AAX Intelligence: BTC, ALTS & AAB

AAX Intelligence: BTC, ALTS & AAB

News & Insights

26 Feb 2021

On the hourly charts, BTC is currently looking bearish, suggesting that this downward movement could continue. Currently, after a few days of highly volatile trading, BTC has somewhat settled.

BTC

BTC has recently seen a sell-off. During this sell-off, BTC and most altcoins saw significant drops in value. This was somewhat expected. Numerous altcoins were vastly overextended having made 100% moves over the week before. What does this mean for the overall outlook on BTC?

BTC short-term charts

On the hourly charts, BTC is currently looking bearish, suggesting that this downward movement could continue. Currently, after a few days of highly volatile trading, BTC has somewhat settled. This is due to BTC approaching the end of a triangle. The triangle in the chart below has so far been identified as a descending triangle. This suggests that there will be a continuation of the negative movement. However, the triangle may turn into a symmetrical triangle due to the early breakout suggesting that the formation below could be incorrect.

Before this formation occurred, the downwards move was a clear (A), (B), (C) EW corrective move. The formation of a triangle suggests that there will be further downwards movement with the triangle a part of a larger time frame (A), (B), (C) move. This triangle occurs within the (B) EW.

BTC/USD short timeframe

Looking at the period before the drop

When looking at the period before the drop we can see that BTC was trading within a parallel channel. To find out more about channel formations.

BTC then broke above this channel, overextending itself. A move back within the channel then occurred which is a bearish signal. BTC did find support at $55200 USD, although this was subsequently ploughed through.

BTC/USD channel formation

Formation at the top

Once BTC broke below the channel resistance, BTC formed a broadening formation. When looking at the broadening formations they typically move in five waves.

Below we can see a drawn example of the formation which occurred with BTC. It is called a right-angled broadening formation and it is bearish. The formation is only effective for signals when using the 1 hour or a higher time period.

When this occurs, it is easy for traders to mistakenly believe that the final wave will extend.

Right-angled broadening formation

One reason why this formation is so effective is due to it also being a H&S formation. We can see this in an example below.

H&S formation in the broadening right angled formation.

Below we can see the broadening right angled formation which led to the subsequent sell off. BTC ran out of fuel.

BTC/USD

The dip

Once BTC broke below $55,000 USD BTC then saw a major sell off. During this sell off if we went to the lowest wick, BTC fell 23% losing almost a quarter of its value. As we can see below, there was major consolidation towards the bottom of the (C) wave which implied that stage 1 ((A)) of the longer time frame (A), (B), (C) was completed.

BTC/USD dip

BTC long-term outlook

Currently, it looks as though BTC is within wave (4). The retracement which we will see is substantial, however, the main part of the retrace has already occurred. If there is another dip, this will likely be an x< -15% move for BTC.

Once this retrace has completed the target for BTC is firstly $70,000 USD. This will likely be resistance due to the number being significantly rounded just like $10K, 20K, 50K etc.

Before we reach $70K, BTC does need to break through the $51.6K and $58.3K resistance levels.

BTC/USD long term EWs

Altcoins during the sell-off

In the chart below we can see various alt coins against BTC during the recent pullback. As we can see, the BTC correlation with these cryptocurrencies is high.

Crypto shown: SUSHI - purple, LTC - pink, NAS - turquoise, OCEAN - orange, ETH - yellow, BTC - blue

Various crypto vs BTC

Not alt altcoins saw the same issues however. Below we can see a chart for COTI, which has seen a comeback, nearly reaching recent highs in the chart below.

COTI/USD

Altcoins conclusion

In conclusion, most alt coins follow BTC price movements, although with increased exaggeration of these movements. There will, however, be a select few altcoins which might see gains when BTC recedes. GAS, for example, has seen a substantial price increase over recent days while the rest of the market has suffered.

BTC conclusion

BTC is looking short term bearish, long term bullish. BTC could see some major moves in both directions due to the high volatility.

AAB analysis

AAB has seen a rally recently, moving from $0.06 USD all the way to $0.217 USD. AAB was correlated with BTC during the drop, however as we can see from the chart below, the correlation really ends there.

AAB has found support at the $0.1208USD level and has attempted to break below this level four times since 10/02/21, although the token has held its ground.

AAB/USD chart

AAB price targets

AAB has a wide range of price targets and currently looks high reward/high risk.

Targets from current position ($0.1365 USD)

  • Long target 1 - $0.2117 USD - 53% gain
  • Long target 2 - $0.341 USD - 151.54% gain
  • Drop target 1 - $0.1208 USD - 11.01% loss
  • Drop target 2 - $0.065 USD - 49.25% loss

AAB/USD

Conclusion

For the first time in a long time AAB is looking bullish. AAB saw a bearish checkmate in February and has now seen substantial gains and looks ready to accelerate into an AAB bull run.

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