AAX Intelligence: ChainLink & Compound
28 Aug 2020
Overall, the indicators for COMP are bearish. As for LINK, the indicators are exactly split 50/50 between the bulls and the bears.
- COMP: We can see that overall the indicators for COMP are bearish. There are currently no bullish indicators. This could be worrying for users in a long position as they are entirely relying on the formation and the $164 USD support line to carry COMP towards a higher position. Many of the indicators are currently neutral, although, as stated, the current overall indication is that red candles will be seen soon.
- LINK: The indicators for LINK are exactly split 50/50 between the bulls and the bears. The 20-day SMA has provided great support for LINK recently and could be the main drive behind flipping the bearish indicators bullish as LINK attempts to reach ATHs again.
COMP has had a tough time since the 12th of August, seeing the cryptocurrency drop from $260 USD to its present $178 USD. This has seen COMP lose over 37% of its value over a 13-day period, being one of the worst-performing cryptocurrencies in the top 50 (market capitalization)
Since COMP was released onto the market the cryptocurrency has made numerous formations. As demonstrated below there have been a couple of falling wedges, a descending triangle and a cup and handle formation. From the creation of these formations we have the ability to profit.
Recent COMP formations
Recently, COMP has formed a descending triangle. As shown below this descending wedge has numerous validation points on both the descending support and descending resistance. Both have over three validation points, increasing the likelihood of the formation being legitimate. COMP has been moving very typically within the triangle.
The recent formation is seen as bullish. This is due to the formation having an ascending pre-trend, the wedge being descending rather than ascending alongside a positive breakout as indicated below.
COMP/USD descending triangle
Recent breakout at risk of failing
However, the recent breakout is at major risk of failing. Before the triangle occurred COMP saw unsustainable buying pressure, with the RSI over 80 numerous times, and the cryptocurrency increasing 140% over only 10 days.
COMP/USD - huge increases before the triangle
Potentially this buying pressure may affect the current formation. Unexpectedly after the breakout occurred, the RSI has fallen below 50 which is indicating that there is increased selling over buying pressure. During the move within the triangle, the RSI was somewhat moving with the price. This correlation has continued after the breakout, however, it has been amplified as shown below. If this selling pressure after the breakout remains, this could see COMP break below the all-important XY line. This line is the support for the breakout. If it is broken below then the descending triangle will be invalidated, suggesting that the previous bearish move down will continue.
The BBs for COMP are currently giving somewhat mixed signals for the cryptocurrency. Over the previous two moves, the BBs have been highly accurate for price and trend prediction. The centre line 20 day SMA has acted as both support and resistance for both of the moves. Alongside this the two deviations have acted as highly accurate support and resistance, with no hyper-extensions.
The effectiveness of the BBs recently within these two moves can be seen below. The purple section showing the BBs acting effectively on the move up and the blue section showing the effectiveness of the BBs on the move down.
BBs right now
The BBs may be lacking effectiveness currently. The recent breakout saw COMP find resistance at the top deviation. However COMP has unexpectedly broken below the 20 day SMA and is heading towards the lower deviation. This move to the bottom is being prevented by the support at $164 USD.
The BBs have recently levelled off, alongside this the width of the BBs has decreased; suggesting that a sideways trading period may be around the corner before COMP decides which direction to move.
COMP/USD - BTC/USD comparison
From COMPs release onto the market up until the 17th of August, there had been very little correlation between BTC and COMP as demonstrated below.
COMP/USD - BTC/USD
However, as can be seen above, recently there has been an increased correlation. This could mean that COMP is beginning to blend in with much of the cryptocurrency market, moving away from much of the DeFi madness which is currently surrounding other coins such as CRV, LEND and LINK.
With the BBs showing little conclusion and the TA suggesting bullish behaviour, will the indicators back bullish / bearish or sideways movement with no obvious conclusion?
Indicators set one - SAR, MACD, QQE MT4
- SAR - The SAR has recently flipped from bullish, to bearish. The SAR is now above the candles and is pointing towards negative momentum. However if the $164 USD support level can provide adequate support, then the SAR will quickly flip which could indicate sideways trading due to the small periods in between momentum changes.
- MACD - The MACD is technically bearish, however it appears undecided. There has been a negative crossover in the positive part of the indicator, although the very low number to which this occurred on Y - axis means that there is very little significance in the move. Therefore I personally feel that the MACD is conflicted.
- QQE MT4 - The QQE MT4 is currently bearish. It has seen a negative crossover with the red line moving above the yellow line.
COMP/USD Indicators set 1 - SAR, MACD, QQE MT4
Indicators set 2 - Ichimoku, Keltner Channels, WWV
- KCs - The KCs are currently bearish, with the price currently in the lower regions of the KCs. During the attempted move up, the candles could not break above the top KC, indicating that there was little substance to move up by the indicator.
- Ichimoku cloud - The ichimoku cloud is currently bearish. This is because the cloud is red, alongside the candles being below the cloud itself.
- WWV - The WWV is technically currently bearish this is due to the indicator being red. However like the MACD the indicator is closer to neutral. The recent red section has very little height and very little substance behind it.
Indicators set 2 - Ichimoku, Keltner Channels, WWV
Indicators set three - Gann HL, PPs, BBs/MACD
- Gann HL - The Gann HL is currently bearish. The indicator has turned from blue below the candles (bullish) to brown above the candles (bearish). This therefore indicates that there has been a change in momentum.
- BBs/MACD indicator - The BBs/MACD indicator is currently neutral. The gap between the two blue lines is relatively small, while the cloud is only slightly red; not enough of a cloud to set the indicator bearish.
- PPs - The PPs is currently bearish. The candles are below the centre PP, while the centre PP acted as stiff resistance when COMP attempted its recent descending wedge breakout.
Indicators set 3 - Gann HL, PPs, BBs/MACD
COMP Heikin Ashi
During the descending wedges move down, the Heikin Ashi was majorly bearish. As shown below, the Heikin Ashi moved in three significant periods. Towards the end of the descending wedge there was clear conflict, with neither the red or green Heikin Ashi taking control. This was until the third purple wave, seeing numerous green candles in a row. However during a slight expected retracement, COMP has seemingly over retraced. The over retracement was a 100% retracement between step A and B. This alongside the numerous bearish indicators, has acted as a major threat to the bullish formation. The Heikin Ashi is currently neutral due to neither candle colour taking control of the situation.
COMP/USD Heikin Ashi
We can see that overall the indicators are bearish. There are currently no bullish indicators. This could be worrying for users in a long position as they are entirely relying on the formation and the $164 USD support line to carry COMP towards a higher position. Many of the indicators are currently neutral although as stated the current overall indication is that red candles will be seen soon.
COMP price targets
Bullish price targets
$180 USD +6.5% - The recent COMP formation of the descending triangle should make this an easy target. However with so many of the indicators currently bearish saying that this would have a high probability would simply be wrong. In order for this level to occur, the indicators will need to turn bullish - allowing COMP to carry forward this momentum to $180 USD. The likelihood of this occurring is currently unlikely.
$188 USD +11.3% - The likelihood of $180 USD occurring is unlikely. However if this does occur, then from $180 USD the likelihood of reaching $188 USD would be extremely likely. Although from our current position, the likelihood of reaching $188 USD is low.
$201 USD +19% - $201 USD is looking extremely unlikely at the moment, with the market at seeming crossroads and DeFi coins currently looking very inflated - predicting a +19% increase in price would seem foolish.
Neutral price targets
$164 USD -2.75% - $164 could very well be the level which COMP is at when this Intelligence Report is released - it appears that likely. With all the indicators bearish and $164 USD tested very recently, another test of $164 USD is almost certain. However if $164 USD is hit, it would not mean that COMP would now be bearish, unless it is broken below $164 USD.
Bearish price targets
$154 USD -8.5% - If $164 USD is broken below, then $154 USD would be extremely likely. With many of the indicators such as the MACD on the verge of being bearish, a break below $164 USD could set COMP into potential free fall with likely all the indicators bearish and the bullish TA invalidated. Likelihood of $154 USD being hit is high.
$140 USD -17% - For $140 USD to be hit COMP would need to break through two resistance levels, most significantly the $164 USD support level which has multiple validation points. The likelihood of $140 USD occurring is low.
COMP/USD Price targets
COMP price targets table
|$164 USD||-2.75%||Very High|
|$201 USD||+19%||Extremely Low|
LINK currently has a very useful underlying support. This support has many validation points and has stopped LINK from moving further down during LINKs recent consolidation period as shown below.
LINK has made tremendous gains since the march bloodbath increasing a huge 748%. Alongside this LINK has seen a huge volume increase and has risen all the way to 5th place in the market capitalization rankings.
LINK/USD huge increase
Recently, it appears that LINK has formed a bullish pennant. LINK has used this underlying support for its creation. The micro intraday trends have then formed the top resistance of the pennant as shown below.
LINK/USD intraday trends and underlying support
This bullish pennant has recently seen a positive breakout and has found support from the downward resistance of the pennant. This is a major bullish signal, providing that LINK does not re-enter the pennant, or break below the $13 USD support.
Therefore looking at the current TA LINK is looking very bullish. This bullish move since March is clearly impulsive. It appears that LINK is about to start the 5th wave of its impulsive move. Although as stated earlier it depends on LINK's ability to stay above the $13 USD support level. This wave should see LINK exceed ATHs and dependent on the size of the move could see LINK challenge USDT and XRPs 3/4th spot on CoinGecko.
LINK/USD 5th wave incoming
So with the current formation looking very bullish, what do the indicators suggest? Will they support LINKs recent breakout above the pennant or will the indicators attempt to drag LINK below the $13 USD support level?
Set one - Ichimoku, KCs, WWV, Gann HL
- KCs - LINK had spent a long period of time in the positive hyperextended region of the KCs. However during the recent retracement LINK has returned back into the channels. In this move back down LINK has found support at the centre line, suggesting that LINK will not fall into the lower regions of the KCs. This indicator is bullish.
- Ichimoku - The cloud is green and the LINK candles are still very far above the cloud. However if the Ichimoku cloud was to turn bearish LINK would likely have to fall to around $10 USD which would represent a 33% loss from our current price. This then points questions as to how effective the indicator is in this situation. Indicator is bullish.
- Gann HL - The Gann HL has been bullish for an incredible 66 days. The HL is still bullish although is definitely decreasing the gap between itself and the candles. A similar situation occurred in late July which then saw LINK go from $7 USD to $20 USD. Indicator is bullish.
- WWV - The WWV is currently red and has seen a prolonged red period. This period appears to be coming to an end with a definite curve off visible. However for the moment the indicator is still bearish.
LINK/USD indicators - Ichimoku, KCs, WWV, Gann HL
LINK indicators set two - PnF, SAR, BBs, QQE MT4
- PnF - The PnF is currently red. It has seen no buy/sell signals since its buy signal in early August. The indicator is bearish.
- SAR - The SAR is currently above the candles and has a large distance between itself and the candles. It is indicating that the momentum is currently with the bears. This indicator is bearish.
- QQE MT4 - There has been a cross over between the red and yellow lines in the upper region of the QQE MT4 (X>50). The red line has moved above the yellow one, therefore the indicator is currently bearish.
- BBs - The upper region of the BBs acted as major resistance for LINK in its recent huge move, preventing the cryptocurrency from seeing further gains. Recently LINK has found support with the centre 20 day SMA line, rejecting the bears attempts to push LINK lower. This indicator is bullish.
LINK/USD indicators set 2 - PnF, SAR, BBs, QQE MT4
LINK indicators table
Indicators bullish/bearish table
In conclusion, the indicators are exactly split 50/50 between the bulls and the bears. The 20-day SMA has provided great support for LINK recently and could be the main drive behind flipping the bearish indicators bullish as LINK attempts to reach ATHs again.
LINK Price targets
Bullish price targets
$19 USD +26% - In order for $19 USD to be broken it would require LINK to break through the $16 USD resistance. This should be relatively easy as LINK would have the support of indicators and the recent pennant formation. The likelihood of $19 USD being hit is high.
$16 USD +9% - With the 4 bullish indicators and the very bullish pennant formation LINK should find it easy to reach $16 USD after seeing the huge demand for the cryptocurrency recently. A move to $16 USD would see all of the bearish indicators turn bullish and would make it very easy for LINK to push further. The likelihood of $16 USD being hit is very high.
Neutral price targets
$14 USD -7.8% - $14 USD is a neutral target due to it being above the support for the recent formation. It is also the R3 (bullish) target for the PPs. The likelihood of this being hit is medium, however, would not spell the end of the bullish run.
Bearish price targets
$11 USD -25% - If $11 USD is hit by LINK it could prove the end of the bullish DeFi period. Although for this to happen LINK would need to smash through the $14 USD support, reject the bullish formation and the bullish indicators, all of which would be very unlikely.
LINK/USD price targets table
|$11 USD||- 24.5%||Very Very Low|
|$14 USD||- 7.85%||Medium|
|$16 USD||+ 9%||Very High|
|$19 USD||+ 26&||High|
Price targets table
Price targets conclusion
Looking at the current price targets it appears that a long position will be the take for the majority of traders. However, with the huge volatility surrounding cryptocurrencies currently, it is more true than ever that anything is possible.
This intelligence report is for marketing and educational purposes only. The views, analyses and projections are based on independent research, but cannot be taken as a form of investment advice.
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