- VeChain may soon become another beneficiary of the “Coinbase Effect” as the American exchange considers listing VET
- However, several technical indexes suggest that VET is overdue for a correction
- If validated, the blockchain-based supply chain management token could drop to $0.007 or even $0.006
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VeChain is trending up as the utility of its technology continues to expand across different sectors, but different indicators spell trouble.
VeChain’s Traceability Solution Expands
Blockchain-based supply chain management token VeChain has enjoyed an impressive rally in the last three months. Following the March market meltdown, the price of this cryptocurrency entered a bull trend that has seen the token price rise over 600%. VET went from trading at a low of $0.0015 to reach a new yearly high of $0.0106.
The strong buying pressure behind this altcoin seems to be fueled by the expansion of its use case throughout a wide range of industries. Walmart’s China division of Sam’s Club started developing a food traceability platform powered by VeChainThor; Bayer, one of the world’s largest pharmaceutical companies, also announced that it would implement this technology.
Germany’s Federal Office has recognized the strides that the VeChain Foundation has made, particularly in Information Security (BSI). In a recent study, the upper-level federal agency said that VeChain’s traceability solution eases supply chain management by making it more efficient, practical, and cost-effective.
“Similar to Ethereum, VeChain is a mixture of basic technology and digital currency. The VeChain blockchain is intended to store information about certain products. Unlike OriginTrail, VeChain is significantly more capitalized and supported by a variety of large companies. The investigation of VeChain and OriginTrail covers the application field of Supply Chain Management,” reads the report.
Prominent companies and government agencies have given VeChain a vote of confidence. To top it off, Coinbase announced that it might add support for VET. The San Francisco-based cryptocurrency exchange is considering the addition of this altcoin to its retail platform.
Like other tokens that have been added to Coinbase, VeChain could enjoy further gains upon listing by becoming another beneficiary of the well-known “Coinbase Effect.” However, different technical patterns suggest that VET is overdue for a steep correction.
On the Vicinity of an Exhaustion Point
Indeed, the TD sequential indicator recently presented a sell signal in the form of a green nine candlestick on VET’s 3-day chart. The bearish formation forecasts a one to four candlesticks correction before VeChain continues its uptrend.
The TD setup indicates that a red two candlestick trading below a preceding red one candle can serve as confirmation of the bearish outlook.
A look at the Fibonacci retracement indicator, however, suggests that moving past the 23.6% Fib could validate the pessimistic scenario. A sudden increase in the sell orders behind VeChain that allows it to close below this critical level of support would likely be followed by a downswing towards the 38.2% or 50% Fib levels. These supply barriers sit at $0.007 and $0.006, respectively.
On the flip side, IntoTheBlock’s “Global In/Out of the Money” model shows that the bearish outlook would be jeopardized if VeChain is able to move above the recent high of $0.0106. Around this price level, over 2,000 addresses had previously purchased nearly 15.7 million VET.
This is a critical resistance level as several of these addresses will attempt to break-even on their positions in the event of a bullish impulse. But moving past this price hurdle increases the odds for a further advance towards the next resistance wall at $0.017 since there aren’t any major supply barriers in-between.
With this in mind, investors and market participants alike should pay close attention to the 23.6% Fib that sits at $0.0085. The ability of this support barrier to hold will determine where VeChain is headed next.
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