Long-Term Outlook For Vechain USD: October 8, 2018

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About: VeChain USD (VET-USD)
by: The Freedonia Cooperative

Summary

Vechain has seen a falling price in 2018, but confidence remains due to high profile partnerships.

Reward programs and trading volume provide a healthy outlook for the price to stabilize and grow.

Analysis also shows bullish cases for the VET/USD pair.

VET (VEN-USD) is the base token of the Vechain project. The project was launched by the Vechain Foundation in 2018.

Fundamental Outlook

Partnerships are this coin's bread and butter—and the usage of the Vechain blockchain by partners is what gives VET its value. We've covered that in more detail here. The later 2018 partnership announcements with BYD, China's largest electric vehicle maker, and People's Insurance Company of China (PICC) are notable and could provide millions of use cases for a trackable blockchain company—but that kind of volume could be years off, and many rounds of testing.

Technical Outlook

VET is a new altcoin which has been trading for less than 4 months, after the swap of the old VEN token with the new VET token. As such, long-term data on VET is not only unavailable but is also not very reliable for long-term analysis of this token. Therefore, the daily chart will be used for the analysis in this article.

The daily chart presents the medium-term picture, which can be found below:

Description: C:\Users\PC\Documents\Eric Grant\VET_dly.png

VET/USD Daily Chart: October 3, 2018 (courtesy of TradingView.com)

Price Action

VET is presently undergoing the same phase that many crypto tokens have gone through. The initial token sales usually feature reward programs that provide generous bonuses to early bird investors. For these early birds, the initial price jump that occurred in the first 5 days of listing provided opportunities to sell off the bonus tokens at an enormous profit. The Early Bird X Node Rewards was one of several reward programs issued by the Vechain Project, and with the market being flooded with these reward VET tokens, prices fell very steeply.

Some positive partnership announcements caused prices to pick up once more, before renewed selling resumed on the back of the general bearishness of the crypto market. These price moves have created identifiable resistance and support areas, demarcated by the descending trendline which connects the price highs and the horizontal support line.

Volume

Prices contained within a pattern will eventually break out of one of the two boundaries, usually close to the point of convergence of the trendlines known as the apex. The volume information is very important. Upside breakouts require an increase in buying volume (long green volume bars). A downside breakout does not necessarily have to be accompanied by an increase in buying volume.

So what are the possible trade scenarios for traders wishing to trade the VET/USD crypto pair?

Trade Scenario 1

A continuation of the bearishness seen in the market in recent times will see the lower trendline being broken. This line has already been tested several times and is coming under severe pressure. If this trendline is broken, there is nothing holding up the price and it may get down to the $0.006 price area. This price move could occur very soon, or it may take some time to evolve since the apex is still some distance away.

Trade Scenario 2

The price action still has some way to go before the apex is attained. Therefore, the price action may continue to find itself in the range formed by the descending trendline resistance and the horizontal support. Therefore, the short-term price action may be a bounce from the support line, all the way to the trendline resistance.

This move is best visualized with a 4-hour chart, where a break of the red line that constitutes the upper border of the symmetrical triangle will allow the price move up to the long-term resistance at $0.015.

4-hour Chart for VET/USD: Investing.com

So what this means is that even if we have a situation where price continues to bounce between the trendlines on the daily chart, we have to see price break above the triangle pattern shown above for the upside move to the descending trendline to be completed.

Long term, the second scenario should see price action bouncing between the trendlines identified on the daily chart until price is very close to the convergence point between these lines. At this time, a breakout is expected to occur.

Market Sentiment

The long-term, mid-term and short-term outlook of the VET/USD pair is:

  • Long-term - Neutral to bullish
  • Mid-term – bearish
  • Short term – bullish

Please note: the price moves described on the daily chart could take several days or even weeks to evolve.

Disclosure: I am/we are long VEN-USD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.