VeChain (VET) has reached a critical support level where it is suitable for a bottom. However, there are no signs of a bullish reversal yet.

VET down 86% versus ATH

VET is down since hitting an all-time high of $0.279 on April 17th. The downside led to a low of $0.039 on Feb. 24. From an all-time high, that figure represents an 86% drop.

Although the price has edged up slightly since then, it is still trading below the $0.068 resistance area. This level previously acted as support since May 21 before crashing and then turning into resistance (red icon) in January 2022.

Until this level is restored, the trend cannot be considered bullish.

VET/USDT 2-day chart | Source: TradingView

VET develops bullish divergence

The daily chart offers a relatively optimistic outlook. The main reason for this is a clear bullish divergence that has formed on both the RSI and MACD (green line). Such significant bullish divergences often herald a trend reversal to the upside.

In the case of the RSI, which is a momentum indicator, the RSI developed after the indicator hit its lowest reading since the catastrophic plunge in March 2020.

If an upward move starts, the next area of ​​resistance is $0.095. This is the 0.382 Fib retracement resistance and horizontal resistance area.

Daily VET/USDT Chart | Source: TradingView

The 6-hour chart shows VET moving along a descending resistance line that has been in place since December 27th.

A break above this will do a lot to confirm that the bullish divergence trend has started.

VET/USDT 6 hour chart | Source: TradingView

Count waves

Trader @Crypto618 tweeted a VET chart and said that this decline is taking place in a descending parallel channel and could be part of a correction.

Source: Twitter

This channel can be clearly seen in the logarithmic representation, but does not correspond to the normal channel.

If the drop is in the shape of an ABC correction (black), then wave A:C has a ratio close to 1:1, which is the most common of these corrections.

Therefore, combined with this channel, it supports the possibility that the price has bottomed.

On the long-term move, the wave number suggests more that VET has just completed the fourth wave of a five-wave bullish pulse (white) that began in March 2020.

If true, the price will gradually rise to an all-time high.

Weekly VET/USDT Chart | Source: TradingView

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions

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