VeChain has been on a rampage surging nearly 185 percent in the last 22 days. The spike appears to be correlated with rumors that link the company with China’s launch of a nationwide vaccine tracking system. Despite the bullish impulse seen lately, several technical indicators are estimating that a correction is underway.
VeChain’s drug and vaccine traceability solution
On Aug. 3, 2018, VeChain (VET) announced a partnership with DNV GL, an international accredited registrar and classification society, to use blockchain technology to create drug traceability, monitoring, security, and auditing solution for the nations’ pharmaceutical industry. At the time, the firm claimed to be the only approved blockchain traceability provider in Shanghai. And, that it was tasked to achieve the traceability requirements by 2020.
The decision to get involved in the pharmaceutical industry was in response to a series of vaccine scandals that affected the country. In 2018, Chinese vaccine manufacturers provided faulty and falsely documented vaccines to schools. And, in 2015, two people were arrested for illegally selling over $80 million worth of vaccines across 20 Chinese provinces.
Now, Xinhua News Agency, the official state-run press agency in China, revealed that the nationwide vaccine tracking system is set to be launched in March 2020.
According to Yan Jiangying, deputy director of the National Medical Products Administration:
“The system will cover information on the entire supply chain of products of all domestic vaccine manufacturers and vaccination information from health departments. The establishment of the national system will integrate the whole process of vaccine production, circulation, and vaccination so that vaccines can be trackable. [It] will enable improved visibility into order status, shipment status, and provider inventory of vaccines, for authorities to better supervise.”
As China prepares to launch its drug and vaccine traceability system many speculate that it is powered by VeChain. This has taken the price of VET to skyrocket, but it seems like it is reaching an exhaustion point.
VET technical analysis
Over the last three weeks, VeChain went through an exponential upswing that saw its price rise by nearly 185 percent. To put this into perspective, this cryptocurrency was hovering around $0.0028 on Oct. 24, and in the last few hours, it hit a high of $0.0081. Despite the massive run-up, VET is signaling a retracement before the continuation of its bullish trend.
Based on its 12-hour chart, VeChain is forming a shooting star candlestick pattern. This technical formation developed as VET opened, moved up, and is now closing day near the opening price. A shooting star estimates a potential price top and the beginning of a reversal.
Adding to the bearishness, VET is trading on an aggressive thirteen candlestick, per the TD sequential indicator, that is preceded by a green nine. The combination of these two candlesticks with a shooting star is a strong indication that a pullback is underway.
Closing below the 50 percent Fibonacci retracement level could take VET down to the 38.2 Fib that sits around $0.0058. A further increase in the selling pressure behind this crypto could take it down to the 23.6 Fib at $0.0047. This scenario coincides with the outlook seen on the 4-hour chart.
Under this timeframe, the TD sequential indicator is also presenting a sell signal. And, the preceding candlestick formed a spinning top. This technical pattern estimates that buyers are losing control over the price of VeChain, and a downward move could be near. Breaking the support given by the 21-four-hour moving average could take VET down to the lower Bollinger band, at $0.0058.
Nevertheless, a close above the 65 Fib, at $0.0079, could invalidate the bearish outlook.
Many of the Chinese-based projects have greatly benefited from President Xi Jinping’s decision to embrace blockchain technology, including VeChain. If the rumor that China’s drug and vaccine traceability system is related to VeChain’s vaccine tracking solution proves to be true, the firm could showcase the utility of VET. Therefore, the bullish sentiment behind this cryptocurrency could just be getting started. However, it seems like VET could retrace before it continues its uptrend.
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