Market Outlook #103 (1st December 2020)
Hello, and welcome to the free edition of the 103rd Market Outlook.
In these free versions of the Outlook, I provide my analysis on Bitcoin and Ethereum.
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Market Cap: $358.25bn
Thoughts: Another week (and month) goes by and Bitcoin shows zero signs of slowing; if anything, these past few days may well have shown us the path for the next year. Bitcoin closed out November in historic fashion and whether you use Bitstamp, Bitfinex or Binance as a reference, we also now have a new all-time high in place.
If we begin with the monthly chart, we can see the sheer strength of Bitcoin going into the final few days of November, as price pushed all the way into the all-time high at $19,890 and closed barely a couple of hundred dollars below it, but well above the prior all-time high monthly close at $13,800. A historic month, to say the very least, made all the better by the fact that volume for November was higher than the preceding 5 months. Such a strong close effectively at all-time highs suggests to me that – though we will certainly see some intense volatility continue over the next week or two – we are now on the cusp of the rally to the next cyclical high, which will likely occur over the next 12-18 months.
Looking now at the weekly, we can see that the rally from $10,500 continues to be supported by the trendline and last week finally saw the first red candle after seven consecutive green closes. This is healthy, and that week of consolidation below the all-time high most certainly provided the fuel for the push we are seeing early this week to new all-time highs. As I had mentioned in the previous post, it is very likely that we see some sort of short-term blow-off above $20k followed by a more meaningful dip. Where that dip goes, I do not know. There is a lot of talk about whether we are likely to see 30-35% dips such as those of the previous cycle this time round because of institutional interest, but despite this I would not consider a deep dip to be out of the question. If we were to get that sort of deep retracement, the $13,900 area is the obvious support, but I would fully expect it to be front-run, so my spot bids will be above $14,000.
Turning now to the daily, we did get a 15% dip last week, which was swiftly bought up, trapping everyone who opted to attempt a breakdown retest short at $18,300. We have now swept the all-time high by a few dollars on most exchanges and today’s price-action saw a violent sell-off immediately after the fact. This trapped any breakout buyers above $19,450, many of whom likely had stops below yesterday’s low – funnily enough price swept yesterday’s low and has since rallied higher again. Whilst we chop around $20,000, I would expect to see more of this trap everyone kind of price-action. Only when we close the weekly above $20,000 do I think we’ll start to see a more steady trend higher again. One thing to be wary of here is that we are printing bearish divergence as we push higher; this does not necessitate that the top be in just yet, but we do appear close to that blow-off point before the real trend begins next year. Exciting times ahead – 2021 should be fantastic.
Price: $609.17 (0.0316 BTC)
Market Cap: $70.164bn (3,582,138 BTC)
Thoughts: Ethereum still looks incredibly bullish on both pairs, with little to no resistance against the Dollar for another 20-25%.
Beginning with ETH/USD, we can see from the weekly that price continues to rally higher on growing weekly volume, now having pushed away from trendline support, steepening the curve of the rally. I expect us to continue towards $790 with very little interruption to be honest, and when we turn to the daily we can see that prior resistance levels are being flipped into support. In fact, as anticipated last week, that $490 area was retested last week following the push higher and the V-reversal was quite something – something that I unfortunately missed out on as I woke up late; typical. Despite that, I did jump on the train a little later and remain long ETH, particularly after today’s candle swept yesterday’s low into $553, which held as support. I’d like to see the pair continue higher from here over the coming week. If we fail to do so and start to break lower, a close below $552 would open up the retest of $490, though I’d be exiting on a daily close below the former level and looking to re-enter closer to trendline support. Above, the only real target I have is $790.
Turning to ETH/BTC, following the bullish engulfing / reversal hammer we printed a couple of weeks ago, we saw continuation last week and appear on the cusp of the next leg higher to retest 0.042. Volume continues to climb following the bottom at 0.0262. Looking at the daily, we have turned market structure bullish following the bottom, rallying into resistance at 0.0328 before dumping back into the 200dMA to retest it as support. This aligned with a trendline breakout retest, providing a perfect area for a higher-low to form. Since, we have pushed a little higher but I’d like to see this follow through towards 0.035 to be certain the trend has reversed. Over the coming months, I am expecting to see 0.042 retested as resistance.
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