Market Outlook #104 (7th December 2020)
Hello, and welcome to the free edition of the 104th Market Outlook.
In these free versions of the Outlook, I provide my analysis on Bitcoin and Ethereum.
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Market Cap: $356.21bn
Thoughts: So, another week, another push higher, though the $20,000 level remains a struggle.
If we look at the weekly, we can see that following the first red candle in around two months, last week price pushed higher and closed at the highest price of all time, with last week’s high sweeping the Coinbase all-time high at $19,890 by $25. New all-time high plus new highest weekly close is undoubtedly bullish, but we do appear to be struggling to pierce that $20,000 level. Looking at this chart, it does look like we are ready for it this week, but the reaction at $20,000 will be key; break through, wick higher and ultimately close the week back below last week’s high and I would be quite convinced we’ve put a short-term top in; however, break above and close the weekly above and I think we could see even more of a squeeze before any meaningful pull-back into support. The third scenario I am considering is that we simply fail to break to a new high this week, in which the case the daily time-frame will give us clues as to where we are headed.
Looking at the daily, everyone can see the bearish divergence on the push higher last week, but until we see a breakdown of market structure, there is no reason to expect this to be the top. What would that breakdown consist of? Well, a daily close below $18,500, thus printing a lower-low. If we see that occur, I’d expect $17,200 to be retested as support at the very least, though it may well be the case that the failure to find acceptance at new all-time highs on the first attempt sends us back towards $15,350 or potentially lower (such as the $13,900 area everyone is eager to buy). However, that is the bearish scenario; the bullish scenario – and currently more likely scenario based on existing market structure – is that we push higher from here above last week’s high. Ultimately, anyone who has shorted up here would be given a free ride down should we not at least sweep that $19,915 level this week, which would be surprising to say the least. If we do start closing the daily above that high, my target is $21,040, based on the 1.618 extension of the current range.
Price: $594.70 (0.0309 BTC)
Market Cap: $67.5bn (3,517,332 BTC)
Thoughts: Last week was one of consolidation for Ethereum but I do still think that there is very little resistance overhead for another 20-25% rally.
If we begin with ETH/USD, we can see from the weekly that price is finding resistance at the 38.2% retracement of the entire bear market, although last week closed above the level. Much like BTC/USD, the pair continues to close at higher prices each week, but, unlike the former, Ethereum has no technical resistance between here and $750-790 (50% retracement and historical resistance), if it can push higher again this week above $636. If it is unable to do so, a deeper pull-back would see it come down to retest the $491 area it has already found support at once. Turning to the daily, the pair has found acceptance above prior resistance at $553 following the test of $491 as support and the swift reversal from that level. Whilst we remain above $552, I see no reason not to expect further upside from here. Should we break and close below that level, however, I would look to play a short into $491
Turning to ETH/BTC, following the formation of a higher-low on the weekly and the reversal of daily market structure to bullish once again, we now appear to be consolidating at a short-term pivot around 0.031. As regular readers will know, I still have my eyes on that breakout above 0.042, which would catapult the pair nearly 30% higher to fill in the gap between there and 0.0536. However, it may be some time before we see that breakout, as the period between each higher-high within this channel has taken at least four months, which would take us to mid-January at the very least if we see a similar period of consolidation prior to continuation. Throwing a prediction out there, I expect we’ll see 0.053 tested by April 2021. Turning to the daily, price is holding above the prior resistance at 0.0301, as well as the 200dMA, and whilst we are above both of these I do not think we’ll see much downside. Break below both, and I’d expect 0.0286 to be retested. However, my expectations are consolidation around this level before a push towards 0.035 before January.
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