Binance Coin’s performance in 2020 has seen its value vault into the top five highest market cap cryptocurrencies. One fundamental reason for this is the increased ‘burn’ rate of the existing BNB supply by Binance. For those of you unfamiliar with what a ‘burn’ is, it is essentially a removal of existing tokens from the market – they are deleted. This kind of move is similar to what happens in the stock market when a company performs a reverse stock split. BNB’s current assumed price behavior is that a reduction in supply will increase the valuation of the remaining BNB available. Of course, demand must also be the same or increase. A similar burn occurred in 2020 when Stellar Lumens (XLM) burned a massive amount of its supply but did not see the same kind of valuation increases that BNB has experienced.
Key Dates – Anniversary Dates
Anniversary dates of all-time highs and lows are a vital part of cyclical analysis. For the purposes of this analysis, I’ve identified the prior all-time high found in the first week of January 2018 as our primary swing high (black vertical lines) and the low of the first week of trading in the second week of July 2017 as the primary swing low (orange vertical lines). The behavior we expect to be associated with these date ranges is for BNB to be near important swing highs or lows. While the amount of data is extremely limited, there are some observations that we can make. The most important is the swing high anniversary dates (black vertical lines). In all instances, the price action after the swing high anniversary date is extreme. In other words, BNB makes massive moves after the second week of January. The swing low dates (orange vertical lines) don’t appear to show us much, but they tend to occur at minor swing highs and lows. Nevertheless, attention should be paid to the second week of July as an important future inflection date. The week of July 12, 2021, should be monitored if BNB is trading at a new high or trading at a new swing low (but still above the January 2021 open).
Key Dates – W.D. Gann’s Cycles of the Inner Year
The next date ranges are based on W.D. Gann’s Cycles of the Inner Year. The inner year cycle is based on the number of days or bars/candlesticks an instrument has spent in a move. For example, the most minor day cycle is the 45-day cycle. Gann warned traders to pay attention to the 45-day cycle (extends to 49 days) because we often see reversals around that period of time. Gann’s Death Cycle is a 49-day cycle – look at any financial instrument and measure 49 days from a critical swing high or low. You’ll find a shocking frequency of major reversals occur after 49 days, especially if the move was extreme. The most essential cycles for the inner year are the 90-day, 180-day, 270-day, and 360-day cycles.
The image above is the daily chart for BNB. Notice that where the all-time high occurred for BNB and where prices have consolidated is near two significant Gann inner year cycles: the 365-day cycle from the Covid crash in March 2020 and the 180-day cycle from the dominant swing low in September 5, 2020. You’ll observe I’ve identified two key date ranges in the future: May 13, 2021 – May 21, 2021, and July 12, 2021 – July 17, 2021. The May 13 – May 21 range is a combination of two Gann inner year cycles: the 90-day (90-days from February 19, 2021) and the 250-day (250-days from September 5, 2020). The 90-day is the most important of the inner year’s cycles, but the 250-day cycle is also essential. Gann wrote that the 250-day cycle tends to reflect prices trading at a swing low if the market is trending up. We should watch out for BNB trading near a swing low around May 13 – May 21.
The second date range is clustered around the anniversary week of July 12, 2021. The two cycles of the inner year in this range are the 144-day cycle and the 315-day cycle. Gann did not write extensively about these two cycles, but they both share some keywords to describe the behavior we should see price exhibit: termination of trends and fast (Gann called them ‘blow off’ moves), violent corrections. Traders should look for a significant reversal lower if BNB has trended higher into this date range and for a major reversal higher if BNB has traded lower into this date range.
Now that we’ve established some key date ranges, at what price levels should we look for? To develop key price levels, we’ll utilize a combination of Fibonacci retracements and extensions along with Gann’s Square of 9.
Key Support and Resistance Levels – Fibonacci Retracements and Fibonacci Extensions
The green horizontal bars above represent zones where there is a confluence of Fibonacci retracement levels. I’ve removed the Fibonacci retracement from the screen because it’s way too messy. Still, I’ve isolated the levels where we see three or more different Fibonacci retracement levels falling on top of each other. I’ve included the Volume Profile (right side of the image, red and green horizontal bars) because when I find Fibonacci confluence zones, I like to see them match up with high volume nodes in the volume profile. Interpreting BNB’s Volume Profile with the Fibonacci confluence zones is difficult on this chart because we don’t see a lot of complimentary zones between the Volume Profile and the Fibonacci zones. The only two Fibonacci confluence zones I see respecting a level near a high volume node is the 118 – 122 level, which is just below a high volume node at 129, and the 53 – 56 level, which is above the VPOC (Volume Point of Control, the longest horizontal Volume Profile bar) at 47. Traders need to watch for any drop below the 118 to 122 value area because, according to the Volume Profile, there is little to no supported trade volume between 118 and 53. A move that would generate that kind of a drop would almost certainly be uncommon and most likely the result of a flash crash. The more likely strong support zone here is at the 118 – 122 value area.
The red highlighted area above represents a confluence of three Fibonacci extension levels that fall between 608 and 730. Near-term resistance based on the same Fibonacci extensions is at 290.85 and 327.23. Between 327 and 608, wide-open space indicating a move above 327 could trigger a sustained action higher with little resistance.
Gann’s Square of 9 – Key Time and Price Levels
Gann analysis is an advanced form of technical analysis that requires years of study. In Gann’s work, he developed and used several ‘wheels,’ and the most well-known is the Square of 9. In a nutshell, the Square of 9 is a forecasting tool that allows the user to identify futures prices at futures dates. The coding geniuses at Optuma have developed a way to draw these levels on a chart for us automatically, so we don’t have to go through the pain of manually completing the data sets.
The above image shows only the 360-degree price levels for BNB on Gann’s Square of 9. The Square of 9 dates, represented vertically, shows the 90, 180, 270, and 360-degree date levels. I’ve circled three zones where time and price are squared. If BNB is trading near one of these price levels around the date (July 13, 2021), we should expect a very fast rejection move to the upside.
Putting it all together
Key Reversal Dates: May 13, 2021 – May 21, 2021, and July 12, 2021 – July 17, 2021
Key Support Levels: 146 – 152, 200
Key Resistance Levels: 291, 327, 608
For the bearish scenario, watch for a drop over the next 49 to 90 days. Pay special attention to the date ranges listed above and the price ranges listed above and discussed in this analysis. If BNB is trading at any of the critical price levels in the date ranges we’ve identified, look for a rejection move higher and resumption of the bull trend.
For the bullish scenario, watch for any break above the 327 value area as it could indicate a substantial move higher towards the 608 value area. Like the bearish scenario, if BNB is trading near the upper resistance price ranges we’ve identified near any of the key date ranges, expect a violent reversal to the downside.
We could see one condition that is entirely time-based and ignores any of the price levels, and that is the consolidation move. Watch for any further constriction in BNB’s price action over the next three weeks because that could be a warning that long-term consolidation is likely. If that occurs, watch what price does around the key date ranges and prepare to trade in that move’s direction. Remember to do your own due diligence and complete your own analysis before making any trades.