Bitcoin price review
BTC has seen uncharacteristically low volatility since the BTC halving on 11/05/2020. This means that since the last report, neither the bullish nor bearish scenario have played out due to the BTC price moving very little. As we can see below from the volatility indicator, BTC is at its lowest levels since the very start of the year, indicated with the vertical green line.
This low volatility since the last report means that BTC has once again moved very little with a stalemate between the bulls and bears. Over the past 25 days we have seen BTC fall around 5%, with a clear movement zone created between $8500 and $10,000 USD.
With BTC moving within this zone until a breakout occurs, it would be highly risky to place a trade before this breakout. Different price levels have different risk levels due to the risk of the breakout being fake, or not having enough power behind it to sustain itself resulting in a swift reversal.
Breakout levels risk
In the chart and table below it shows the risk associated with a breakout to the up and downside. The higher the risk the higher the likelihood of it being a fake breakout and BTC returning to the middle movement zone. It is important when trading to match your risk levels with your trading style in order to maximise your profits.
The likelihood of the bearish and bullish scenarios coming up will depend on the breakout seen by BTC. If the breakout is significant with a low risk level then there is an increased likelihood that the scenario will play out. If BTC continues to trade within the movement zone with continued low volatility, then we will see neither scenarios play out.
BTC bullish scenario
In the bullish scenario we would see a positive breakout through the price levels previously mentioned, starting with $9750 USD. This would represent a positive gain of 7% sending BTC from $9110 USD to $9750 USD.
However the $9750 resistance level would likely be strong and may be tested multiple times before it is broken. After the $9750 is broken in the bullish scenario we would likely see BTC fly through to the $10100 resistance line before reaching the $10500 USD resistance. A move from BTCs current position to $10500 USD would represent a substantial 14% gain. Due to the size of the gains needed for BTC to reach this level, once it is reached in this scenario we would likely see the BTC bears retest $10100 USD with the previous resistance line acting as support.
When there is a decrease in volatility with price suppression, the next move is usually huge and can go either direction, depending on the direction of the breakout. This move after a low period of volatility often hits the boundaries of the Pivot Points in either the S5 or R5, far away from the centre line. An example of this was seen in late 2018 to early 2019 when Bitcoin was sitting between $4200 and $3300 USD.
BTC saw a decrease in volatility followed by a period of low volatility, followed by a breakout above the $4200 resistance point and a subsequent explosion of price up to the R5 pivot point. BTC is currently seeing a similar scenario with BTC currently in the low volatility stage waiting for an explosion to take place, however when this will happen is currently uncertain.
The R5 region which would be hit if a significant positive breakout occurred would be $14,400 USD. However, with only four days of this month’s pivot points remaining this will likely not be the price reached and with the low volatility seen the breakout R5 price will be lower come 01/07/2020 when the new pivot points are set. The next resistance levels after $10500 are $11000, $12000 & $13150. If $10500 were to be broken significantly, in the bullish scenario it would be likely that these levels are met. This would result in some major gains as demonstrated in the chart below.
What is supporting the bullish scenario?
The MACD is supporting the bullish scenario with a line divergence. The MACD as a collective has fallen while the price has moved very little as shown in the chart below.
If the MACD can continue to fall while the price remains in the same area, this could be seen as support for bullish movement. In the bullish scenario once the MACD has continued to fall there will then be a positive crossover in the lower / negative region of the indicator. This will then lead to positive price action and will see BTC breaking above the $10500 USD resistance.
The RSI is a momentum indicator showing us when a cryptocurrency is overbought. Two figures are provided when you use the RSI on AAX, the 30 and 70 line. When the line is below 30, this shows that the cryptocurrency is oversold with a bounce due. 70 shows us that the cryptocurrency is overbought with a retracement due. Some people choose to use 80 and 20 instead of 70 and 30 in cryptocurrencies due to the volatility of the market.
During the recent moves seen since February the RSI has had a lower angle than that of the direction of price as demonstrated below. The angle of the RSI against the price movement shows the effectiveness of the pressure applied by the bulls and the bears.
As we can see from this chart the RSI has firstly clearly moved very much with price, with no significant divergences. This means that the RSI is correlating with the price. Since February the price has been an amplified RSI, seen by the angles of the movement, for example the move from $3800 USD had an angle of 51 degrees while the RSI had an angle of 33 degrees being significantly lower. However, unlike the two previous price movements, the current price action has a lower angle at 11 degrees compared to the 22 degrees seen with the RSI. This could be an indicator for significant bullish price movements when the indicator hits 30 due to the selling pressure being ineffective on BTC. However, for BTC to hit 30 it would be required to fall somewhat further, likely to the lower region of the movement zone at $8950, even possibly towards the next support level at $8650.
Bullish scenario conclusion
In the bullish scenario we would firstly see BTC break $10500 USD before moving towards the $11000, $12000 and $13100 resistance levels. Moves towards these regions would represent significant gains, although BTC may fall further towards $8650 before the move up occurs. If the $8300 USD is broken significantly below this would subsequently invalidate the bullish scenario.
Bitcoin bearish scenario
In the bearish scenario BTC would see a negative breakout downwards. This would see BTC break below the $8900 USD support level. BTC is currently very close to $8900 as it is currently sitting at $9010 USD. If the $8900 level was to be broken, the next level of resistance would likely be seen at $8650 and after that $8300. If $8300 is broken significantly then the market sentiment would be very much bearish.
Even if the bearish scenario does not play out, it is extremely likely that $8900 USD will be hit due to BTC volatility. However, the likelihood of BTC dropping below $8300 and then the bullish scenario playing out is very low. A drop to $8300 would represent around an 8% loss from current prices. BTC after $8300 Before BTC hits $8300 USD in the bearish scenario it must break below the $8650 support as demonstrated below with the trend based the Fibonacci extension tool.
BTC after $8300
Before BTC hits $8300 USD in the bearish scenario it must break below the $8650 support as demonstrated below with the trend based the Fibonacci extension tool.
The $8650 0.236 level will offer great support. This has already been seen with four points of contact, as soon as this level was hit, BTC proceeded to bounce straight back up. However the price gap between the 0.236 level and 0.382 has very little resistance. The lack of resistance and support was seen when BTC moved down in March and on the move back up when BTC soared from $7500 USD to $9000 USD in a matter of days. A move down to $7500 USD if BTC broke $8650 would be highly likely. Due to the huge price suppression seen recently, in the bearish scenario BTC would likely move down to $7500 USD very swiftly.
In the bearish scenario the move down would likely be a retracement, not an impulsive move. BTC would fall to the 0.5 Fibonacci retracement in this scenario as demonstrated below.
The fall down would result in a 22% loss from our current value and see BTC dip below $7000 USD. In the bearish scenario this is likely to be the bottom before a move up.
What is supporting the move down?
The trend line mentioned in the last report remains broken. The upwards support trend line seen since the March collapse, was broken on the 12th of June as shown below.
This trend line had numerous validation points showing its significance. BTC has not broken back into the trend line showing that the break is still valid and suggesting that market sentiment has flipped from bullish to bearish.
The Heikin Ashi candlesticks are used to identify trends, they are weighted candlesticks. Green Heikin Ashi candles represent a positive trend. Red Heikin Ashi candles represent a negative trend. The Heikin Ashi is currently red suggesting that BTC is currently in a downwards trend, therefore showing support towards the bearish scenario.
Clear loss of BTC bullish momentum
BTC has shown a clear loss of bullish momentum. This can firstly be seen with the KC (Keltner Channels).
The KC have clearly started to lose momentum, seen with the curving off of the indicator, alongside the price moving downwards into the lower part of the KC. This loss of bullish momentum can also be seen with the SAR Parabolica which has been above the price for an extended period of time. Both of these factors support the bearish scenario and point towards downside movement for BTC.
Bearish scenario conclusion
For the bearish scenario to take place BTC will need to break below $8650 USD, a break below $8900 is too risky to state that the bearish scenario will take place as it crosses over with the bullish RSI scenario. This alongside the BTC volatility seen on a daily basis and that $8900 USD is on the edge of the current BTC movement zone. If the $8650 USD is broken then we will see BTC move swiftly to $7000 USD with resistance at $8300 USD and $7500 USD. The bearish scenario will be invalidated if BTC breaks $10100 USD.
AAB Price review
The price of AAB has taken a real beating over the past couple of months losing over 80% of its value from its ATHs, falling from $1.7 USD all the way to $0.15. However the cryptocurrency has risen 49% from $0.15 and is now trading at $0.22. The selling pressure on AAB has been huge with the RSI now at 21, in the very oversold area. However this has been the case since AAB was at $0.65 – will the selloff continue? Or will AAB reverse the downwards trend seen over recent weeks?
Further downwards movement
AAB is currently moving within a downward channel. This channel has been forming for 21 days and price is continuing to trade within it.
The channel has numerous points of contact, validating the channel. AAB will continue to move down this channel unless a positive breakout occurs, AAB could break below the channel signalling a rapid move down. This channel is supported by the long term SAR which shows that the momentum is clearly bearish.
The SAR was last showing positive momentum 46 days ago. However the gap between the SAR and the AAB candle body is extremely small. This is indicating that the SAR could be about to flip and show positive momentum.
AAB Bollinger Bands
AAB is struggling to break above the red median line of the BBs. It has tried multiple times. AAB is currently trying again: if it manages to break significantly above the centre line and sustain itself, it would be likely that the AAB selling pressure will diminish. If AAB does not manage to break above the median line and subsequently stays below, the next volatility period of AAB would likely see further downwards movement.
Reversal taking place
AAB has recently broken above a descending wedge formation. This indicates that a bullish reversal is ready to take place, if AAB can sustain its short term upwards movement and not make a significant move below $0.15 USD.
If AAB can sustain the upwards move, break above the 0.382 Fib trend based extension level and move above the Ichimoku cloud, then an extended upward movement should be expected. This would see AAB break into the upper regions of the BBs, confirming that the next trend would be positive. The trend afterwards may be either a corrective or an impulsive move, it depends on the scale of the breakout and which Fibonacci levels are broken. If the 0.236 level is broken, the chance of the move being true and not false is high. This would result in AAB likely hitting 0.5 Fibonacci trend based extension if it is a corrective move – this would be a 150% increase in price from our current position.
AAB price targets
If the AAB downtrend continues we would firstly need to see AAB break below $0.15 in order to validate further downwards movement. After this the next price which would likely be hit would be $0.10 USD with $0.05 USD also potentially hit, although the small amount of selling power the AAB bears have left makes this unlikely. In the upside scenario, AAB would first hit $0.32 with resistance at $0.42 before hitting $0.50. The likelihood of hitting $0.32 USD currently seems high, although it is very much dependent on AABs ability to stay above $0.15 USD.
International economic and business news
Amazon has purchased the self-driving startup Zoox for approximately $1.2 billion USD. The purchase by Amazon appears to be a part of Amazon’s global expansion into various markets. Amazon purchasing Zoox could also play a huge part in their supply chain, with the delivering of Amazon products through driverless cars and drones appearing to be the future for the company. Gaming stocks have surged recently due to people being at home more during the crisis.
The increase in price also coincides with the release of details on the new Xbox and PlayStation, alongside huge demand for Nintendo Switches. Wirecard has filed for insolvency due to a $2 billion accounting fraud which failed to be spotted by the German regulators. The collapse of the company has affected both investors and customers. Users have been unable to access their accounts while support phone lines have been down. Wirecards failure alongside the VW emissions scandal in 2015 have raised questions about German regulators.
Boeing are approaching crucial flight safety tests this week for their 737 Max. The failure of the new 737 has placed major pressure on the whole company, with the success of these tests a must for Boeing. UK holiday bookings have surged with prices for flights in the green zones such as Spain and Italy increasing tenfold in just a couple of days.
Hyundai are increasing their interests in blockchain. This is being done through the company which they are backing – Hdac. Hdac have recently registered three trademarks in Korea, with the company helping Hyundai with IT and construction.
Russia’s blockchain voting system ran into troubles recently, with the voting system going offline due to technical errors in the first couple hours of it being live. Bitfury who are in charge of the project are aiming to encrypt votes alongside the data being secure and immutable.
LG and Mitsubishi have been attacked by ransomware gangs, with the gangs threatening to release the data collected into the public, unless the companies pay up. The LG hackers managed to gain 40 GB of source code which could affect LG phone users. Mitsubishi’s attackers have also claimed to have stolen data from the company. These revelations are somewhat worrying with LG shipping 13.9 million phones in 2017, while Mitsubishi are involved in a number of industries, most famously the automotive industry.
Many cryptocurrency startups are leaving Estonia due to new EU laws implemented in the country. The laws have increased the price for cryptocurrency companies to operate in Estonia. Many are now looking to move to the UK, with the UK offering Sandbox licenses.
This external intelligence report was written by Oliver Page, and commissioned by AAX, for marketing and educational purposes only. The views, analyses and projections are based on the author’s independent research. The report should not be taken as a form of investment advice.