VET is the base token of the VeChain project. The project was launched by the VeChain Foundation in 2018. The token initially created for this project was and ERC20 (Ethereum-based token) previously known as VEN. This has now been replaced by a token which runs on the project’s own mainnet known as VEChainThor (VET). The token is listed on the Binance exchange, where it is available as a pairing against BTC. This analysis is however done on the VET/USD pair.
About two weeks ago, VeChain (VET) was in the news, as it was reported that the project had launched its mainnet officially. This was positively received by the market, and VET gained against the USD and BTC.
It is back in the news again, as reported this week that that the largest Chinese automaker had partnered with VeChain. This was announced by Sunny Lu, co-founder of VET at the Worldwide Developers’ Conference. BYD is the largest car maker in China, and the company has entered into this partnership because it wants to integrate blockchain into its production process. Under this arrangement, VeChain will be used by BYD to track the performance of its vehicles and to provide a reward incentive for car owners who keep their carbon emissions low.
Such partnerships and adoption of VeChain by major industry players are expected to boost the price of VeChain in the long term.
VET, as a spinof from VEN, is a very new altcoin; it was launched in 2018 and only got listed on the VeChainThor platform for the first time in August 2018 as a replacement for the old VEN token which had got as high as $8. VEN token holders were offered 100 VET for every 1 VEN previously held.
Due to the relatively short time that the token has been on the market, no analysis can be provided on the weekly or even the daily charts. Therefore, we have to look at the hourly charts to pick out the possible trade scenarios for VET.
VET/USD 5-Hour Chart: September 12, 2018 (courtesy of Investing.com)
Price action started the day on a strong downward move and has now found itself attempting to break the support level of $0.01187. This support was a previous resistance which formed on August 5, 2018. This resistance level was broken and now served as a support for price when it attempted to come down on August 15. Downward price move was rejected at this area, and price pushed up to highs of $0.01960 before September’s bearish moves in the crypto market caught up with it. We need to see the price bar close below the $0.01187 support level before a breakout can be said to have occurred. Even when the breakout to the downside has occurred, the closing penetration must be at least 3% of the total downside move.
The 1-hour chart also paints a picture which aligns with the downward momentum being seen on the 5-hour chart. Here, we see that a downward channel has formed, and price action has broken below the lower channel line.
VET/USD Hourly Chart: September 12, 2018 (courtesy of Investing.com)
So what are the possible trade scenarios for traders wishing to trade the VET/USD crypto pair?
Trade Scenario 1
The momentum and market sentiment for VET/USD is bearish. If the price bar on the 5-hour chart closes below the support line with at least a 3% penetration, then the door will open for further weakness on VET/USD. This can be traded off the 1-hour chart, using a short trade entry if there is a candle pullback to the broken lower channel line. The target for a short trade would be the next support area, which is between the $0.00986 and $0.010000 area. This area is the next support because some candles had tested this area previously without breaking below it.
Trade Scenario 2
It is also possible that the present price bar on the 5-hour chart will not close below the support line. If this happens, the support line will be tested several times within the coming days. On the 1-hour chart, this will manifest as several small candles that attempt a pullback to the broken channel line. However, this scenario looks the least likely of the two scenarios painted above, at least in the short term.
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 – bearish
Please note: this analysis was done on hourly charts. Therefore, the price moves described will play out only within a few days. The situation on the charts shown above may therefore evolve rapidly and change before the 3rd weekend of September 2018.
Eno is an Associate Member of the UK Society of Technical Analysts (STA). He writes about the financial markets and the technology behind the markets. His articles can be seen on several forex blogs and broker educational websites.