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AAX Trends

AAX Intelligence: BTC, ZRX & NEO

AAX Intelligence: BTC, ZRX & NEO

News & Insights

01 Oct 2020

BTC has had a great week since the last report, almost reaching $11000 USD again. However, when we look at the hourly chart, BTC has just broken below its upward trend line.

BTC has had a great week since the last report, almost reaching $11000 USD again. However, when we look at the hourly chart, BTC has just broken below its upwards trend line.

BTC/USD 1hr chart

BTC bounced consistently off the upwards support, but it then met upwards resistance as shown below. BTC made five moves within these two lines before breaking substantially below the support line. This break below saw BTC fall from $10900 towards $10700 USD in one single candle.

BTC/USD moving between the lines.

Ascending wedge

The two lines which BTC has been moving within formed an ascending wedge, with the two lines converging in an upwards direction. For this formation there were numerous validation points. There were five validation points on the upwards resistance, with four validation points on the upwards support. Overall this means that the likelihood of this formation being true is very high.

Before, the ascending wedge BTC had seen a downwards trend. Typically a downwards trend met by an ascending wedge is a bearish formation. The typical bearish sentiment surrounding this formation was confirmed when BTC broke below the wedge.

BTC/USD ascending wedge

BTC H&S

The ascending wedge formation is complimented by a possible H&S formation (head and shoulders). The potential H&S is demonstrated below with BTC currently looking at the formation of the right shoulder.

H&S formation attributes:

  • LS peak - $10835
  • H peak - $10960
  • RS peak - ?

The RS resistance line is at $10777, a significant break above this would be unlikely. If the candles break above $10900 then the whole H&S alongside the wedge formation would be invalidated.

BTC/USD H&S formation

Below is the potential path for BTC if it follows the bearish direction of the wedge and the H&S formation. If this path is followed, it would see BTC fall towards $10350 USD. This would present a 3.2% drop, a potential short opportunity if the formation is obeyed.

BTC/USD H&S path potential

The H&S intricacies

Before BTC will hit the $10350 region, first BTC needs to create the right shoulder. Currently, BTC is seeing an ever decreasing gap between the SAR and the candle bodies, implying that this push back towards $10777 could be soon. Alongside the SAR, the MACD is currently bullish (on the daily chart it would be bearish, however due to the shorter time frame we are focusing more on the histogram than the crossover itself).

As we can see there is a clear upwards trajectory for the histogram. This could see BTC push towards $10830 USD. Although this push will likely be a wick, the body of the candle will be unlikely to close significantly above $10777 USD in this scenario.

BTC/USD the formation

How does this potential formation fit within BTC's long-term trend line?

This potential formation fits within the long-term trend line perfectly. If this plays out then it could see a wick test of the long-term support line below.

BTC/USD long-term support line

The second potential H&S

When we pull back and have a look at the longer-term BTC view, there is the potential of a second H&S.

As shown below the H&S is on the daily candles, although the likelihood of this occurring is much lower. However, if it does occur we should see BTC fall below $10000 USD, towards the 0.382 Fibonacci retracement while staying above the 200-day SMA.

The potential price loss could be around 14%, seeing BTC find support just above $9000 USD.

BTC/USD long term H&S

Fitting in with the Elliott Waves

The potential H&S formation is also backed by the potential EWs. As shown below, if the H&S formation takes place it would coincide with the EWs suggested in last week's analysis.

https://trends.aax.com/2020/09/25/aax-intelligence-report-cel-btc-uni/ - last week's Intelligence Report - CEL - BTC - UNI

In last week’s analysis, there is the suggestion that we are currently within an Elliot correction wave. Before this wave, we saw an impulsive EW.

In this scenario, the H&S combined with the EW outlook would see BTC break below the long-term support line.

BTC/USD current EW situation

The game-changing BTC formation

BTC is currently within a symmetrical triangle. There is a downwards resistance trend line, with an upwards support trend line. Both have similar angles, it has seen a symmetrical triangle form as a result.

BTC/USD symmetrical triangle

BTC/USD MACD symmetrical triangle

The significance of this triangle

The last time BTC saw a symmetrical triangle was in early July. The breakout direction of this triangle then saw BTC have a substantial rally. This saw BTC increase from $9000 USD to the heights of $12000 USD.

Now we see the same scenario, BTC is coming towards the end of the symmetrical triangle. The breakout of this formation will likely be the most important breakout this year. If it breaks out in a positive manner, we will see BTC strive for new heights likely reaching $15000 USD before the EOY.

Reaching $15000 USD would be good news for BTC. The gradual growth seen since January (excluding the worldwide March crash), would show progress and increased stability around BTC.

If BTC breaks below the triangle substantially, it could see BTC head back down towards $8000 USD. If $8000 USD occurred it would see BTC still up over the course of the year, although many in the market might feel somewhat disappointed.

BTC/USD Two triangles

Short term price possibilities

Triangle breakout

In the bullish scenario, BTC would break above the downwards resistance line. From here, we would then see BTC potentially retest the resistance line as support, before a move up to $11500 USD.

In the bearish scenario, BTC would break below the upwards support line. BTC would test the current resistance line, although would fail to break it. Once a significant move has been made below the upwards support, BTC would be looking at $9600 USD.

Bullish scenario - $11500 USD + 7.7%

Bearish scenario - $9600 USD - 10.4%

BTC/USD symmetrical triangles, price targets

BTC/USD indicators

Due to BTC volatility decreasing, with BTC coming towards the end of its symmetrical triangle the usefulness of the indicators is debatable. Although here is the list of indicators are their current sentiment:

  • Ichimoku cloud - The ichimoku cloud is currently hard to judge. The cloud has turned from green to red, however the candles currently remain within the green cloud. As an overall picture, the ichimoku cloud is slightly bearish.
  • PnF - The PnF is currently bearish. With the candles moving from a green period, to a substantial red period. This indicator is currently showing few signs of changing.
  • BBs - The BBs are currently seeing a squeeze. With the candles moving in and out of the lower and upper sections, currently, there is no decisive mood with the BBs. The BBs will be bearish or bullish, once the move is made.
  • Gann HL - The Gann HL is currently bearish. However like BBs it is fairly uncertain. The distance between the Gann HL and the candles is very small, with the indicator constantly flipping. This does however support the idea that BTC is within a formation.
  • MACD - The MACD is currently bullish. There had been a positive crossover, with the histogram currently green. However this is a weak bullish push.
  • QQE MT4 - The QQE MT4 is currently bullish. The red line has seen a positive crossover with the yellow line. Overall the distance between the two lines is decreasing, implying that a switch could be about to take place. Although for now the indicator is bullish.
  • SAR - Very much like most of the other indicators, currently undecided. This can be seen clearly with the lack of effect which the indicator is having on BTC.
  • 200 day SMA - Bullish. BTC is currently above it, the 200 day SMA should act as support for BTC, potentially soon.

BTC/USD indicators

Indicators table

Indicator Bullish Bearish Neutral
200 SMA X
BBs X
SAR X
MACD X
QQE MT4 X
PnF X
Ichimoku X
Gann HL X

BTC conclusion

In conclusion BTC is looking short term bearish as BTC. This will likely see BTC continue to remain within the parallel channel until the next report. During this time BTC may complete the short term H&S formation.

ZRX

Breakout

ZRX has recently seen a positive breakout. This was a breakout of a descending wedge with a positive pre-trend, as shown below.

The descending wedge which ZRX has broken out from has numerous points of contact. During this wedge ZRX had fallen from $0.8 USD towards $0.35 USD.

ZRX/USD breakout!

Descending wedge Fibonacci

During the descending wedge the Fibonacci levels were obeyed. As shown below when ZRX was moving within the descending wedge, once the 0.236 level was it ZRX moved straight back down.

ZRX/USD Fibonacci

The crucial Fibonacci level which we are looking for in these attempted moves back up is the 0.5 Fibonacci level. This retracement level is typically where the market opinion moves from bearish to bullish.

In the recent breakout on the hourly chart, ZRX has failed to break above the 0.5 Fibonacci level. This level was rejected and has seen ZRX move into the 0.236 zone. Therefore it suggests that ZRX will likely fall back towards the 0 Fibonacci support line, before a new attempted move up.

A move back down towards the 0 Fibonacci support line will see ZRX fall down to $0.33 USD, from the current $0.39 USD. This would represent a value decrease of 13% for ZRX, if this scenario occurs.

ZRX/USD 0.5 failure

ZRX EWs

Below are the recent EWs for ZRX. The recent breakout appears to be a retracement move.

ZRX/USD EWs

The recent move being a retracement, is supported by another potential H&S formation.

ZRX/USD H&S

If ZRX obeys this formation alongside the EWs, it is another suggestion that ZRX could move back down to the critical support line. This then coincides nicely with the short term bearish BTC analysis.

However this could be incorrect, it is likely that if BTC breaks positively out of the symmetrical triangle early, many altcoins will follow and see price gains.

NEO

NEO has been behaving interestingly recently, with the cryptocurrency not fully correlating with the rest of the alt coin market. NEO has made huge strides since March, although has recently seen a large correction. This correction has seen NEO move from $26 USD to $19 USD, a value decrease of 27%.

During NEOs move up since March, the 0.5 Fibonacci retracement has been highly effective at showing whether the move will continue.

In the first two retracement, NEO bounced off the 0.5 Fibonacci level before a further move up. However in the recent retracement down, NEO plummeted straight through the 0.5 Fib. This Fib level drawing was created with the two dark blue X points. Therefore the current bullish trend is at an end.

NEO/USD Fibonacci

This means that NEO has a high likelihood of falling towards the purple line. The purple line is the 0.5 Fib level from the two light blue X markers. In the move down it could possibly see NEO follow the green path. If this occurred, NEO would likely still remain bullish.

NEO indicators

Heikin Ashi - bearish, the indicator is currently red and has momentum.

SAR - bearish, the indicator is currently above the candle.

PPs - bullish, NEO is currently within the P/R1 section.

MACD - bearish, negative crossover with a red histogram, angle of histogram increasing.

BBs - bearish, candle recently moved below the centre line, likely to hit the lower deviation in the coming days.

RSI - bearish, properly fell below 50 for the first time since July, more interest in selling than buying.

200 SMA - bullish, NEO is above the 200 SMA and could use it as support before the EOY.

MA ADX - bearish, has recently turned from green to red.

NEO/USD indicators

NEO indicator table

Indicator Bullish Bearish Neutral
SAR X
MACD X
PPs X
ADX MA X
SMA 200 X
RSI X
BBs X
Heikin Ashi X

NEO conclusion

In conclusion, NEO is looking very bearish. This does not mean that NEO is looking long term bearish. In the long term, NEO is looking very bullish, it is just likely that the cryptocurrency could see a major retracement over the coming weeks.

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