After starting off 2019 on a solid note, the Binance Coin (BNB-USD) seems to have lost its way, hammered by the rise of Bitcoin which more than tripled its Q1 2019 value in a matter of a few months. Like most other altcoins which are paired with Bitcoin, BNB has an inverse correlation with BTC/USD. Let us look at what November could hold for BNB/BTC.
BNB continues to be driven by events within the parent exchange such as the recent expansion into the United States. Furthermore, there is a lot of in-house development within the company. For instance, Binance has partnered with CipherTrace to bring institutional-grade traceability of transactions within its exchange. This partnership is also expected to deepen the anti-money laundering (AML) protocols within the exchange.
However, critics of BNB continue to maintain their hardline stance against the coin, whose use case continues to be questioned in several quarters. One such critic is billionaire Calvin Ayre, who has called BNB a “house of cards” with “zero utility”. Still, others see BNB as a safer bet due to the volume, popularity, and security record of the Binance exchange itself.
The technical analysis for BNB/BTC starts with the weekly chart. BNB started off 2019 on a bullish note, but a head and shoulders pattern which coincided with the start of BTC’s meteoric rise against the USD forced the value of BNB/BTC downwards.
BNB/BTC Weekly Chart: November 5, 2019
Currently, the BNB/BTC pair is locked in a down channel, but has entered a brief consolidation, with price testing the horizontal resistance at 0.0022863. However, it has been unable to breach this level to the upside, which has helped keep the pair within the channel.
BNB/BTC Daily Chart: November 5, 2019
The daily chart presents an expanded view of the price action, with the 0.0022863 resistance seen for what it is: previous highs on September 2 and 18, as well as a cluster of highs from October 15 – 25. This resistance is a therefore a very strong resistance which has to be breached for BNB/BTC to experience any further upsides in the near-term and medium-term.
To the upside, we have resistance levels at 0.0026136, 0.0027699 (highs of February 16 and August 15/16) as well as the July 3 high at 0.0030052. To get to the first resistance target, price action of BNB/BTC must break the 0.0022863 resistance with a solid double candle close or a 3% penetration close. Such a move will take BNB/BTC out of the down channel and return it to the pathway that takes it north. This critical move probably has to coincide with a fall in the BTC/USD pair for it to gain traction.
On the flip side, if price continues to be rejected at 0.0022863, then it will stay within the downward channel. In this circumstance, this channel will guide BNB/BTC lower towards the next support at 0.0020175 (Sept 5 and October 28 lows). Below this level, further support lies around the 0.0017745 price area (January 27 and September 4 lows). This area comes into focus on the downside break of the Sept 5/October 28 lows.
The long- and mid-term outlook of the BNB/BTC pair is:
- Long Term – Bearish
- Mid-term – Neutral
The long-term chart features price still locked in the down channel. Along with nearly 100% reversal of price action, the long-term view for BNB/BTC remains bearish.
Medium-term, price is located within a horizontal consolidation pattern which has 0.0022863 as the ceiling and 0.0020175 as the floor (see daily chart). The medium-term view is therefore neutral.
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Disclosure: I am/we are long BNB-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.