25 August 2020

TA Tuesday: DeFi persists and the levels to watch for BTC and ETH

Patrick Heusser

Patrick Heusser

Head of Trading at Crypto Broker AG

About the author

DeFi is still a hot topic. Therefore, we we will include a technical analysis of a few coins today.
But first let’s begin with the big ones…

BTC$ (4h)
We are currently trending (or, rather grinding) our way higher in a potential channel. Right now we are right at the liquidity pool: around 11.8k. Looking at the Ichimoku cloud, we need some fresh impulses to be able to break higher. For the time being, the cloud seems to be providing some support at around 11.5k.

In terms of the short term, I am looking for a push through the 11,920 level, which should bring us to the local top of 12.4k.

In terms of the downside, I will reconsider my longs when we break 11.4k on a daily basis.

ETH$ (4h)
I see two possible set-ups. Either we go back into the accumulation box between $380-$420, or we push through the Ichimoku cloud and attack the local top of $440.

I increased my long ETH$ position in the $390 area and am looking to hold longer if I have to. The key level for any longs is between $360-$380 depending on how much room you have for your stops.

The wave structure looks very clean. We reached three higher highs in a row with two confirmed higher lows (a higher low is only confirmed when there is “new” higher high being printed).
As long we trade above 0.03250, this structure will remain valid, and I am looking for a “new” higher high.

This is a perfect long set-up for all of you traders who are not overly convinced that the crypto market is in bull mode but see the potential of ETH to outperform BTC.

Now for some DeFi coins…

ATOM$ (4h) – Cosmos
This coin had a really good run and made a new ATH on Coinbase. There was a good accumulation phase (yellow box) in early August and then a parabolic run up. It was mainly driven by the scalability issue of the Etherum platform (congestion of the blockchain due to high traffic out of all those DeFi smart contract executions). Other blockchain solutions, e.g. Cosmos, Tron, Cardano, OmiseGo, and Solana also got some traction.

I am looking for some consolidation (next yellow box) before we see the next leg higher.

BAND$ (4h)
Band is like LINK: an onchain oracle provider. And like LINK, it had a stellar upmove since early August. I believe we are in a 5-wave sequence (EW) and currently in the correctional 4th wave. As per the Fibonacci retracement levels, we did a deep and healthy correction of the impulsive wave 3 of almost 61.8%. Now, it is time to complete wave number 5, which should at least reach the highs of wave 3 ($18).

A breakout of the Ichimoku cloud would give me confidence that this wave structure is valid and that a next leg up is around the corner.

LINK$ (4h)
Not much to add… As I said, it looks nearly identical to BAND$.

LEND$ (4h) – AaveAave
This was one of the early movers and steady performers in the DeFi space. So far, we have seen two accumulation phases (yellow boxes) followed by strong pushes to the upside. The last push looks a bit steep but for crypto traders this is nothing out of the ordinary. This last push was mainly driven by the news that Aave Limited was granted an Electronic Money Institution license. Funnily enough, though, as per public records that license was already granted on July 7th.

I am looking for a healthy correction from the current levels when the FOMO retail trader realised this.

OMG$ (4h) – OmiseGo
A tough one to chart… My best guess is that we are in a potential 5-wave structure (EW), and we are currently in the 4th wave. For all you brave ones out there: buy at around the 61.8% Fibonacci retracement (around $5.50) and pray for the 5th wave to materialise, which would push the price towards $10.

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