Market Outlook #103 (1st December 2020)
Hello, and welcome to the 103rd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Chainlink, ZCash, Fantom, Tellor, COTI, NKN, ThorChain and Chromia.
As ever, if you have any suggestions for next week’s post, feel free to leave them in the comments below.
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.
Price: $0.638 (3,312 satoshis)
Market Cap: $29.579bn (1,495,194 BTC)
Thoughts: If we look at XRP/USD, we can see on the weekly that the pair closed above the 200wMA a couple of weeks ago, continuing the rally last week into resistance at $0.78 before falling off a little but closing above $0.57 on the highest weekly volume in over two years on Bitstamp. Looking at the daily, we found support at $0.50 and now look to be reversing to retest $0.78, above which I’d expect to see $1 tagged. If price fails to break higher, however, it may well be that this mini bull cycle is over for the pair, and I’d be looking for a complacency shoulder followed by a lower-low to confirm this, expecting price to retrace towards $0.33 if so.
Turning to XRP/BTC, just like the Dollar pair on Bitstamp, Binance also saw the highest weekly volume of all-time traded – higher even than that of December 2017. Regarding price, the pair closed above resistance at 2,767 satoshis, printing bullish market structure for the first time in over a year (higher-high and higher-low on the weekly). Price pushed into the 4,000 satoshi target I had last week and sold off, retesting 2,780 satoshis as support and bouncing. Again, like the Dollar pair, I’d like to see it flip 4,000 satoshis as support to open up another leg higher into the next major resistance at 6,400 satoshis.
Price: $13.95 (72,382 satoshis)
Market Cap: $5.492bn (285,663 BTC)
Thoughts: LINK is struggling to push higher and is battling with an important resistance level, but I do think the BTC pair is looking promising for a reversal from here.
If we begin with LINK/USD, we can see that price has been rallying into the $13.80 pivot but after closing above it a couple of weeks ago, it closed back below last week, with the weekly range taking out both the high and low of that previous week. It is clear that control of this level is all-important, and if we do see another weekly close above I would expect to see the pair push on for an ATH retest. if we look at the daily, price has wicked down just shy of the 200dMA again last week, which continues to support the trend. This may well prove to be the dip before the ATH retest if the pair can hold above $14. Unless we break below again, I remain bullish the pair, but a close below would open up a retest of the 200dMA as support. Looking more long-term, whilst we are above $9 I don’t see any reason to be bearish LINK.
Turning to LINK/BTC, here is where I see an opportunity for a high R long position. If we look at the weekly, we can see that price is now pressing right up against long-term trendline support. Turning to the daily, we can see bullish divergence, as well as a sweep of the low at 67,540 satoshis into the trendline support, with price now retesting the trendline resistance as support. The risk/reward here for longs is excellent, as we have clear invalidation if price prints a lower-low below the trendline support and the 360dMA below it, and our target for trend continuation is ultimately the all-time high, though I would look to scale some off at 96.8k satoshis. Let’s see what happens this week but I am cautiously optimistic.
Price: $77.33 (0.00403 BTC)
Market Cap: $808.374mn (42,007 BTC)
Thoughts: ZCash is looking bullish, which is a rather strange sentence…
If we look at ZEC/USD, we can see that price has closed above $73.33, printing a higher-high after finding significant support at $54.77. Volume has been rising each week as the pair has rallied and I am expecting to see it push up towards resistance at $106 soon. Get above that and the next resistance is $142; above that and we break out of a two-year inverse head and shoulders with a target of $408, but that is a long way away. If we drop into the daily, the pair printed a 2020 high at $106 in August before selling off and finding support at $55, where it formed a double-bottom. Since, it has rallied and broken out of the neckline at $73 and retested the 200dMA as support, forming a series of higher-highs and higher-lows. At the current rate, we could expect to see $106 tested in late December. Break below the 200dMA and the rally has failed, and I would expect $54.77 to be retested as support.
Turning to ZEC/BTC, price printed an al-time low a couple of weeks ago at 3,348 satoshis, sweeping the range support of 3,639 satoshis but closing the weekly back above the level. This was followed by a rally last week into resistance at 4,700 satoshis, but, if we turn to the daily, we can see the market structure reversal and the higher low being formed here. If this structure holds, I’d expect the next test of 4,700 satoshis to succeed, with trendline resistance an obvious target above. Break above that and it’s a clear path to 7,900 satoshis, which has capped price throughout 2020.
Price: $0.021 (112 satoshis)
Market Cap: $54.59mn (2,829 BTC)
Thoughts: Beginning with FTM/USD, the first thing I’d like to mention is that Fantom remains below the key support turned resistance at $0.0245, having retested it last week but failing to climb above, whilst also retesting trendline support as resistance. Looking at the daily, we can see that price is pushing up against the trendline resistance from the August all-time high, and that confluence of resistance above at $0.0246 is the only thing currently keeping it down. Once that level gets flipped, I’ll be entering a position with a target of an ATH retest.
Turning to FTM/BTC, price is now consolidating at historical support above 86 satoshis but remains capped by the 360dMA, below which it has fallen. We do appear to be forming a range between the 360dMA as resistance and 86 satoshis as support, which is exactly what I wanted to see to confirm re-accumulation at important levels. Now, I’d like to see the 360dMA reclaimed as support, which would also likely push the Dollar pair above that $0.0246 area. This would be my trigger for re-entry. If price falls below 86 satoshis, the next support is down at the all-time low at 37 satoshis, so this area is critical.
Price: $24.79 (0.0013 BTC)
Market Cap: $39.221mn (2,066 BTC)
Thoughts: Tellor is starting to look positive again after a strong first bull cycle and a swift bear cycle.
Looking at TRB/USD, we can see that price fell into the 200dMA after its all-time high was printed at $90, declining around 80% to that $15 area where it found support. Since, it has been pushing higher, breaking above $25 and printing a series of higher-highs and higher-lows above the 200dMA. The next area of interest is $38. Flip that as support and I think the second wave begins, taking this above $90. Break below the 200dMA and the next support is at range resistance around $7.60.
Turning to TRB/BTC, the story is rather similar here, except that we have broken below the 200dMA and are sitting just above the 360dMA at present; coinciding with a range resistance retest as support at 0.00115. This is a prime area for entry in my opinion, as the invalidation is tight on a daily close below range resistance. Unlike on the Dollar pair, we have not yet begun to print bullish market structure, so this is an early entry; risk-averse speculators should wait for the 200dMA to be reclaimed, turning market structure bullish. If we do close below 0.00115, I would not like to be in a position as there is very little major support down to the all-time low – instead, I would opt to wait for a new range to form and buy that.
Price: $0.046 (242 satoshis)
Market Cap: $26.25mn (1,372 BTC)
Thoughts: COTI is one of the projects I remain most bullish on for 2021 and I am liking how both pairs look right now.
If we look at COTI/USD, we can see the rounded bottom that is forming on the weekly, almost like a cup-and-handle for its entire price-history. If the pair can break above $0.056, the next resistance is the 2020 high at $0.09, but I fully expect this to break above and clear the all-time high next year. Turning to the daily, market structure is once again bullish as price has broken above $0.04, flipping it as support once again and climbing above the 200dMA. At the current rate, we might expect an ATH retest some time in January. If you’re on the sidelines, the break above the 200dMA was the trigger for a low-risk entry.
Turning to COTI/BTC, price is behaving precisely as I would like it to following the first wave of a cycle. We are now basing above the accumulation range, finding support at 185 satoshis and beginning to push away from that range. If we look at the daily, price is still below the 360dMA, which was where I originally marked out for re-accumulation, and I am now looking for a break above 320 satoshis to signal the reversal to the 2020 high. Again, I fully expect that 800 satoshi area to be blown out in 2021, given current market conditions.
Price: $0.027 (140 satoshis)
Market Cap: $11.55mn (601 BTC)
Thoughts: Chromia is looking pretty good here but I am still wary of the fact that we could sweep the all-time low on the BTC pair before we see a reversal.
Looking at CHR/USD, here we can see the range that has formed between $0.02 and $0.03, with a weekly close above that latter level the trigger for adding to my position, whenever it comes. Much like COTI, the pair is being held down by the 360dMA, but once $0.0293 is flipped the next resistance is 30% higher at $0.038. Flip that level and it is game on for all-time highs in my opinion. Break below $0.02 and I will exit all of my position as the floor is at $0.01.
Turning to CHR/BTC, we have come awfully close to that all-time low at 114 satoshis and we are significantly below the 360dMA, so for bargain hunters this is prime entry territory. However, it is very possible that we see that low get swept before price climbs, so if you’re not yet in a position it might be wise to wait for the sweep and reclaim. I would only exit on a break below all-time lows if the weekly closed below that level. The flip-side of this is to wait for range support at 180 satoshis to be reclaimed, providing a much safer but lower R entry for the reversal.
Price: $0.84 (4,425 satoshis)
Market Cap: $133.82mn (7027 BTC)
Thoughts: RUNE is looking very strong against the Dollar and its BTC pair is beginning to pick up steam, also.
Looking at RUNE/USD, the long-term trendline support from October 2019 proved the perfect entry point in early November as price broke below the 200dMA, squeezed into trendline support and subsequently V-reversed back to the pivot at $0.63. Since, price has broken back above that level and is pushing for new all-time highs, currently consolidating below them. If you’re holding RUNE, it is safe to say that whilst it is above that trendline it is very much in a bull market.
Turning to RUNE/BTC, this pair deviated below support at 3,600 satoshis, capitulating into the 360dMA at 2500 satoshis before reversing. It has found resistance at 5,675 satoshis, where it has since sold off back to the 200dMA. It is printing higher-highs and higher-lows, however, so dips look like they are for buying, and whilst that 3,600-satoshi support holds firm I do not think there is any reason to be bearish THORChain. Break above 5,675 satoshis and there is very little between it and the all-time high at 10k satoshis.
Price: $0.021 (111 satoshis)
Market Cap: $12.39mn (650 BTC)
Thoughts: NKN has been in one of the longest accumulation ranges against the Dollar that I have seen in quite some time.
If we look at NKN/USD, that 434-day range has seen plentiful volume, indicating serious accumulation, with range support at the all-time low at $0.0067 and resistance at $0.035. Once the pair breaks above range resistance, I think it pushes for $0.092, with $0.14 the next area of interest above it. I am holding this one for fireworks, as it has never experienced a bull cycle in its lifetime.
Turning to NKN/BTC, price did break below the long-term range support at 145 satoshis, which would usually be an exit trigger, but I was expecting a sweep to occur and now I await a reclaim. If we do break and close below 100 satoshis, then I’d sell temporarily and wait for 145 satoshis to be reclaimed as support before re-entering, but for now I remain in my position. I definitely want to be exposed to NKN in 2021, but I’d rather not sit underwater in price discovery if we break a new low. Once 145 satoshis is broken above, I think we fly towards the 2020 high at 350 satoshis, with 580 satoshis the resistance above it.
And that concludes this week’s Market Outlook.
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