VeChain broke above its long-term downtrend in a move which could be followed by a new bull cycle for the altcoin?
While the majority of crypto traders are discussing a variety of bullish and bearish perspectives on Bitcoin (BTC), many altcoins are jumping around and making significant moves. One of them is VeChain (VET), which has surged more than 100% in a matter of weeks.
Crypto market data daily view. Source: Coin360
VeChain breaks 200-Day exponential moving average for the first time since summer 2018
For the first time since listing, VeChain managed to break the 200-day exponential moving average (EMA), as can be seen in the following chart.
VET BTC 1-day chart. Source: TradingView
Some other notably entertaining keynotes can be found on VeChain’s daily chart. It’s not only moving above the 200-DMA and EMA, but it also broke a 14-month long downtrend. Similar to the breakout of the downtrend, a falling wedge pattern with bullish divergences marked the bottom during August and September of 2019.
Remarkably, bullish divergences and falling wedge patterns are one of the most reliable bottom indicators when trading, and once again, they managed to be strict in the call. Given that this occurred in the daily timeframe, it often takes a while before the divergences become ‘active.’
After confirmation, a slightly higher low was constructed before the breakout of the longterm downtrend. Notably, one can be seen that there was a massive increase in volume after the break of the downtrend, which is a strong signal.
VET BTC 6-hour chart. Source: TradingView
The smaller timeframes give a clear view of VeChain’s price action. A regular breakout of the downtrend, including a retest at 0.00000041 Satoshis (sats) before the break upwards to 0.00000062 (sats), the next target. Only a slight retest and consolidation was needed to push the price further upwards. This breakout of 0.00000060 (sats) leads to a new increase in price, which is currently aiming for the range high at 0.00000080 to 0.00000082 (sats).
Meanwhile, the relative strength index (RSI) is showing its highest level since listing on several timeframes. This could indicate that some period of cool-off is ready to occur for the altcoin.
Similar price action is playing out across the altcoin market
Other altcoins across the field show similarities in the strengths of their price action. For example, is ZRX (0x), was one of the first altcoins to break out of a longterm downtrend.
ZRX BTC 1-day chart. Source: TradingView
As can be seen in the chart, a breakout occurred with high volume after a similar falling wedge with bullish divergence was constructed. Alongside the breakout, ZRX moved towards June 2019 levels, which led to a 170% increase since the bottom.
Furthermore, other altcoins are also beginning to take steps towards their longterm downtrend lines and some are currently trying to break out of it. Another good example is Ontology (ONT), which is now moving out of an 18-month long downtrend.
ONT BTC 1-day chart. Source: Tradingview
Ontology broke out of a 5-month downtrend earlier in November. This push shifted the price towards the primary downtrend (18-months old) which has currently broken upward. If it is going to show price action similar to ZRX and move back towards the June 2019 price levels, a continued move towards 0.0001500 – 0.0001900 (sats) is not off of the books.
VeChain against USDT ready for a retracement?
VET USDT 1-day chart. Source: TradingView
The USDT chart is showing some of the same signals as the Bitcoin chart. A heavy move upwards from the local bottom at $0.003 (which was also a falling wedge structure), slight consolidation, and eventual retracement of the range high of $0.006. This retracement leads to a strong bounce of the $0.0051 level which was previously a resistance that flipped support a few days ago.
The price of VET in USDT is currently hovering around resistance with the RSI in overbought areas. The price needs to continue to produce green candles to prevent it from creating bearish divergences, a usual top signal.
Bullish scenario
Given the movements of VeChain, a bullish scenario is more likely to occur than a bearish scenario, and there are several scenarios in place for the asset.
The first scenario would be a straight copy of the movements before the break of 0.00000060 to 0.00000062 (sats) a few days ago. In that scenario, the price will continue moving towards the range high, consolidate a little bit and continue its way towards the next level at 0.00000100 (sats).
VET BTC daily chart, bullish scenario. Source: TradingView
The second scenario first requires a drop first, which is a short term bearish outlook.
In that regard, we still have to take note of the height of the RSI on several timeframes. That could indicate a retracement and retest of the range lows at 0.00000060 – 0.00000062 (sats) before the price is ready to move to the range high at 0.000080 – 0.00000082 (sats). Traders might prefer to look for a long entry in that zone or play the breakout if VeChain flips the 0.00000080 (sats) zone as support.
VET BTC daily chart, 2nd bullish scenario. Source: TradingView
Bearish scenario
A bearish view could occur if the VET/USDT pair is unable to continue showing strength, which would confirm the bearish divergences on higher timeframes. In that regard, traders might look for a retest of the 0.00000060 (sats) zone and a possible drop below that area.
VET BTC daily chart, bearish scenario. Source: TradingView
Given the strength of the altcoin and the volume behind the move, it’s less likely to occur. However, if VeChain retraces back to the range low and doesn’t find enough strength to bounce with volume, a possible retracement towards 0.00000050 (sats) is a real possibility.
There are several reasons for a possible retracement, one could be Bitcoin making volatile movements which would cause the market to become chaotic all over again.
At this point, powerful movements and more likely to continue to the range highs.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
