VeChain Could Have Topped Out After the 555% Rally

VeChain Could Have Topped Out After the 555% Rally

Published: June 16th, 2020

It is a well-known fact, that Altcoins are following the direction of the Bitcoin in most cases. Yes, there are some exceptions, but as a rule, Bitcoin price sets the mood for all cryptocurrencies. During the past 40 days, the Bitcoin has been trading near the 10k area, which is an extremely strong psychological resistance. But during the entire consolidation period, it failed to break above this resistance with confidence.

This might be the sign that there is not enough interest in cryptocurrency investment at this specific point of time, which might result in an overall correctional move across most coins. Today we will look at VeChain, a top 26 coin by the total market capitalization, which currently stands at $511,285,725 USD. While most cryptocurrencies could be either correcting down and continuing to trend down, the VeChain doesn’t seem to be an exception, and let’s try to understand why.

Daily chart

VET/USDT Daily Technical Analysis 16 June 2020

As in most of our analysis, yet again we are starting by looking at the Daily timeframe. It shows that VET/USDT has reached a yearly high and could have produced a double top. This is because we consider the previous area of resistance near 0.01 USD, formed back in June 2019. The VeChain rally has lasted for nearly 3 months, while the price has increased by a staggering 555%. Price went, from the March 13 low (0.0015), up to June 11 high (0.0106).

Every rally ends at some point, and this point could have been reached by the VeChain. As long as the price remains below the most recent high at 0.0106, VET/USDT should initiate a correctional phase. The key support and the potential downside target is seen at 0.0060 USD, which is a 61.8% Fibonacci retracement level applied to the February 15 - March 13 downtrend. This target corresponds to the uptrend trendline, the upper trendline of the descending channel, and potentially the 200 Simple Moving Average.

8-Hour chart

VET/USDT 8-Hour Technical Analysis 16 June 2020

The 8-hour chart shows that the 0.0100 USD level is not only a psychological but also a technical resistance. Fibonacci, applied to the corrective wave down, where the 200 SMA was rejected, shows a precise rejection of the 527.2% retracement level, which is right at the 0.0100. Price attempted to break above, but only produced a spike higher while failing to close above the Fib resistance. Perhaps this is the very first confirmation that VeChain is about to correct down, and this move could be quite strong.

On this chart, we’ve also applied the Fibonacci indicator to the March 13 - June 11 overall uptrend. The 50% retracement level corresponds to already mentioned support at 0.0060, making it a strong magnet for the price in the coming days or weeks.

4-Hour chart

VET/USDT 4-Hour Technical Analysis 16 June 2020

On the 4-hour timeframe, Fibonacci was applied to the rejection of the previously formed support at 0.0060 USD. It is obvious that the price has reached exactly a 527.2% retracement level at 0.0106 and immediately went down. Currently, VET/USDT has reached the average price uptrend trendline, which is acting as the resistance and is being rejected. But what is more important, is a clean bounce off the 78.6% retracement level, which might result in the increase of the selling pressure during the next 24 hours.

1-Hour chart

VET/USDT 1-Hour Technical Analysis 16 June 2020

And finally comes the 1-hour chart where price broke above the descending channel. But, we have applied the Fibonacci indicator to the channel breakout, so that a 50% retracement level is right at the breakout point. The 38.2% Fibs corresponds to the 78.6% Fibs resistance at 0.0094 USD, and today this price level was rejected along with the average price uptrend trendline. Maybe this is exactly what sellers have been waiting for, and if so, price should start moving down from this point onwards.

Summary

The VeChain rally is either ended or is about to end, considering the precise bounce off the 527.2% Fibs as per the 4-hour chart. Current correction might provide just a perfect selling opportunity in the medium to short term, as long as 4h closing price remains below 0.0094 USD resistance.

Downside targets

Based on the analysis of multiple timeframes, there is only one key support level. This is 0.00608 USD, which corresponds to two different Fibonacci retracement levels, the uptrend trendline and the upper trendline of the descending channel.

Probability of an uptrend

Considering the current price action, the probability of an uptrend is very low. However if price breaks above the 0.0094 resistance, VET/USD could be heading towards the 0.0106 high. But, only daily break and close above the 0.0106 resistance will invalidate the bearish scenario and VeChan can be expected to continue trending up in the long run.

Support: 0.0087, 0.0077, 0.0060

Resistance: 0.0094, 0.0099, 0.0106

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