Market Outlook #105 (13th December 2020)
Hello, and welcome to the 105th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Litecoin, Chainlink, Cardano, Cosmos, Waves, Algorand, Siacoin and Ferrum Network. I’ll also be updating my evaluation of Altcoin Market Cap.
This will be the final Outlook of 2020, so I’ll make sure it’s worth your while. I’ll be away for the last two weeks of the year, but I am very much looking forward to checking back in on the markets in a fortnight and evaluating the prospects for 2021. I am certain it will be a fruitful year for us all!
As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.
Market Cap: $358.185bn
Thoughts: Well, we got a dip, but it was very much short-lived…
Looking at BTC/USD on the weekly time-frame, here we can see that this week’s low took out the prior weekly low (always a liquidity hotspot) and is now almost certainly going to close back above $19,000. The bid has been incessant over the past two days, as we’ll discuss when we look at the daily. As we can see, we dumped down into that early 2018 high at $17,160 but front ran it at $17,600, as anticipated in last week’s Outlook, but the bounce from that level has sent price back towards the all-time high weekly close at $19,378; it may well be that this sweep and bounce will provide the necessary fuel to push above $20,000 next week, having now taken out many longs that have been eagerly awaiting that breakout. Given the reaction from above $17,600, I would be very surprised if next week did not see bullish continuation, even if it is short-lived, as the liquidity is now above $19,900 – any move lower would now likely need to tap those highs first to fill shorts for further downside. Looking above, if we do get that pop into $20,000, Fib extensions of this current range would see $21,300 as an area for price to take a breather.
Turning to the daily, the first point here is that price is being supported by trendline support from early November, and the previous bounce from the trendline took price to all-time highs. With this trendline in place, we can see an ascending triangle of sorts forming; if we can close the daily above the resistance at $19,400 on good volume, I think it is very likely this ascending triangle breaks out to the upside. The fuel here for the rally we’ve seen over the weekend was that double tap of $17,650. The first tap printed a bullish hammer and provided the bull trap; longs enter on this classical pattern and two days later get stopped out as that low gets swept into trendline support. This is precisely what we look for to confirm likely upside. Now, early longs got stopped – what about shorts? Shorts undoubtedly have their invalidations at $19,900 in anticipation of a move into $16,300 or even lower. So, it is likely that level gets swept too before any direction is confirmed. If we sweep that level and see a similar pattern of price action, where we print a classical reversal pattern, I’d look for a final sweep of that reversal (the double tap) to get short. However, if we close above the level on solid volume, I’d expect the squeeze to continue into that $21,300 area.
Price: $591.85 (0.0308 BTC)
Market Cap: $67.362bn (3,514,558 BTC)
Thoughts: Much like Bitcoin, Ethereum swept important levels this past week but consolidation remains against BTC.
If we begin by looking at ETH/USD, from the weekly we can see that this past week printed a sweep of the prior weekly low into historical support at $552. Volume has been particularly low this week, so I would like to see more volume return next week if we do push for $640 and higher. Looking at this, I maintain that the pair is on course for $790 before any serious resistance is found. Looking at the daily, we can see a very similar pattern of price-action as that of BTC/USD, with trendline support printing an ascending triangle, with $616 as primary resistance. Close the daily above $616 and I think we accelerate towards $790. The importance here for ETH/USD is to hold above $552; start moving back below that level and the next area of support is down below $480.
Turning to ETH/BTC, here we can see that the past week has been very tight in its weekly range, sweeping the prior weekly low like the USD pair but remaining tight to that 0.031 pivot. Volume has declined for the third week as price consolidates, which is to be expected. If we look at the daily, we can see that volume has been declining steadily, in fact, since late November, following the breakout above the 200-day moving average, with price subsequently pulling back into the MA for support, above which it currently sits. I do think we’ll see a little more consolidation in this tight range, but if price can start closing the daily back above 0.0311 with breakout volume, I would be looking for the next leg higher to the top of the channel to begin. Break and close below the 200dMA and I would expect to see the trendline retested as support.
Price: $82.25 (0.00429 BTC)
Market Cap: $5.435bn (283,560 BTC)
Thoughts: Litecoin looks particularly bullish here against the Dollar.
If we look at LTC/USD, we can see from the weekly that the pair has broken out above several important resistances: the trendline resistance from the all-time high; horizontal resistance at $69 and the 200-week moving average, with $84.50 now acting as resistance and the 200wMA acting as support. I fully expect to see this pair now trend towards the 2019 high at $146, and once we see the weekly close above $85 I will be looking for long entries on the lower timeframes to hold for that gap fill. If we turn to the daily, price broke above prior resistance at $69, rallied above $84.50, rejected and retested $65 as support, subsequently printing a higher-low at $69. This is exactly what bulls want to see, but that $84.50 area is once again overhead resistance; if we do close above it, it would very likely open up a swift rally into $100, which is the next overhead resistance. Whilst price is above $65, there is no reason to be bearish on LTC/USD.
Turning to LTC/BTC, the weekly shows that price remains capped by trendline resistance, failing on two consecutive attempts at a breakout. When we see a weekly close above both 0.004417 and the trendline resistance, I would expect the Litecoin rally to accelerate, with the next area of resistance at 0.0055. Break above that and it will push on for 0.00685, which is historical support turning resistance (above which that 2020 high poked briefly at 0.0081). Looking at the daily, not only is the pair capped by trendline resistance but also the 200dMA and the 360dMA a little higher. This confluence of resistance has been proving tricky for Litecoin, but the risk-averse trade here is to buy a 200dMA or 0.00442 retest following a high volume breakout, assuming it isn’t like the XRP breakout, which took out several levels in one go – in that case, it is likely the setup would have to be reassessed, but I certainly want to be long LTC if we get above there.
Price: $12.94 (67,563 satoshis)
Market Cap: $5.131bn (267,896 BTC)
Thoughts: Looking at the weekly chart for LINK/USD firstly, the pair remains held up by trendline support from that low at $7.25, with price failing to hold above the $13.80 area on successive attempts. This tightening of the LINK range is soon to come to a head, as early January sees that trendline support collide with the level. If we see the pair start closing back above $13.80 from here, it is likely that the bull run will be continuing with a retest of the all-time high, as there will be no real resistance between the two levels. However, LINK bears want to see this trendline fail, leading to a breakdown and likely a retest of $9 as support. Close the weekly below $9 and I would expect $6 to be swept before any reversal. Looking at the daily, very tight below that trendline support is the 200dMA, which has not been traded below since March, although, if we do see trendline failure, I would not be buying the 200dMA; instead, I’d expect $7.25 to be swept into the 360dMA, providing a much better long opportunity.
Turning to LINK/BTC, unlike for the Dollar pair I am very much in a long here, as depicted last week, betting that the long-term trendline support, which has been swept this week, will be reclaimed and provide the base for reversal. The risk/reward was very high on this setup, but it is by no means confirmed; if next week closes below 67.5k satoshis, I will be cutting my position. However, if we close next week above 72.3k satoshis, that would be confirmation for this week’s trendline sweep being a bear trap and my stop will move to this week’s low. Quickly looking at the daily, we can see triple bullish divergence forming into the 360-day moving average, which provides confluence for the bias. Close the daily below the 360dMA and again I will be cutting the position, expecting further downside into 53k satoshis to retest it as support.
Price: $0.15 (806 satoshis)
Market Cap: $4.805bn (250,862 BTC)
Thoughts: Cardano, much like Litecoin, looks bullish against the Dollar and may well have printed a bear trap at the 2020 highs.
If we look at the weekly for ADA/USD, we can see that price has pushed back into that 2020 high at $0.17 but rejected a break above for two consecutive weeks, with this past week taking out the prior weekly low and looking to close near the weekly open. The price-action here from a conventional standpoint seems textbook bearish; we swept a weekly high and have printed bearish divergence. It is possible this plays out to the downside and we see a retest of $0.116 as support, but everyone can see that sweep and divergence clearly, and what it does not factor in is that all of the driving force here is upwards. The largest weekly ranges are pushes higher followed by consolidation and slow pull-backs on low volume. Further, the volume on the most recent push into $0.17 was the second highest in two years. It appears to me that the pair is on the brink of a break higher, and this would be a fantastic bear trap. If we look at the daily, we can see a range is forming below $0.173, with it as resistance and $0.138 as support. If we see the daily close above $0.173, I’d expect those wicks to get taken out above into $0.20. Close above $0.20 and there is a massive gap into the next resistance at $0.41 and I will be looking for longs throughout that gap fill.
Turning to ADA/BTC, having broken above trendline resistance from the yearly high, we are now consolidating above prior resistance turned support at 730 satoshis. Looking at the daily here, the best long entry I can see is either right here with a stop on a close below 700 satoshis, or the more risk-averse entry would be to await a break and close above the 200dMA (confluence with the pivot at 950 satoshis) and buy the retest, looking for at least 1600 satoshis.
Price: $5.23 (27,285 satoshis)
Market Cap: $1.083bn (56,554 BTC)
Thoughts: Beginning with ATOM/USD, here we can see that price is consolidating above the prior resistance turned support at $4.60, printing higher-lows on the weekly since September. The pair is currently range-bound between that $4.60 support and resistance $5.55, with wicks either side but the bodies of each of the past 7 consecutive weekly candles inside. If we drop into the daily, we can see that price is riding the 200dMA higher, failing to close below it on three successive tests and now having broken above trendline resistance and consolidated above it once again. I’m not quite ready to become an ATOM bull here, but if the daily starts flipping $5.56 as support, I’d expect $6.41 to at least be retested, but it is ultimately a close above that level that would confirm the reversal and likely retest of all-time highs at $9. Break and close below $4.60 and this is going to sweep that $3.82 low at the very least.
Turning to ATOM/BTC, this pair is a little more exciting here, as price has reversed the entire 2020 rally back to the base, swept the low at 25.6k satoshis and now is ready to close above it. This was a textbook reversal pattern in late 2016 before the 2017 rally began, but I’d like to see how next week goes before getting involved, as we may well see that second sweep before any push higher. Looking at the daily, I would become bullish on the pair if it flips 28.5k satoshis as support, expecting a retest of 33k satoshis to follow and likely a trendline breakout. This is definitely a pair I have my eye on, as risk/reward could potentially be very high for the reversal.
Price: $8.81 (46,113 satoshis)
Market Cap: $916.05mn (47,858 BTC)
Thoughts: Waves has been in parabolic advance since late 2019, now being closer to its 2017/18 all-time high than the vast majority of alts.
If we look at WAVES/USD, we can see this parabolic rally clearly, with the break above the 200wMA pushing price into resistance at $5.11. Price fell off and retested the 200wMA, closing below and consolidating before break back above it and beginning the most recent leg higher into $8.88, where it currently sits. It is now around a 120% rally away from breaking its all-time high. If we look at the daily, we can see an ascending triangle forming into this $8.88 resistance, and I would expect to see price rally towards the next major resistance at $13.70 from here.
Turning to WAVES/BTC, we can see that price has closed the weekly above the trendline resistance from the all-time high and is now poking its head above the 200wMA, with resistance above at 57.3k satoshis, where I think it will consolidate before retesting the 200wMA, like its Dollar pair. Subsequently, I see this rallying into the confluence of resistances at 100k satoshis, if it is able to close above 57.3k satoshis. This one is a monster and I expect early 2021 to be a period of bullish continuation for both its pairs.
Price: $0.313 (1,634 satoshis)
Market Cap: $367.04mn (19,166 BTC)
Thoughts: Looking at ALGO/USD, the weekly is still printing that long-term rounded bottom above $0.26, with price largely range-bound between that level as support and resistance at $0.39. If we look at the daily, we can see somewhat of an inverse head & shoulders pattern failure on the most recent bounce and rejection into $0.35. This is perfect fuel for resumed upside now that price has pushed lower and swept the 360dMA, but I would like to see a close above $0.35 before I get involved, with obvious targets above being $0.49 and $0.78.
Turning to ALGO/BTC, this is where the range support at 2,030 satoshis is so important, as we have now swept that level, consolidated at new all-time lows and rejected a move back higher into the range. I want to see that weekly close back above 2,030 satoshis to get involved here. If we turn to the daily, a break above 2,030 satoshis would be the trigger for a further 30% of upside into 2,600 satoshis, which is still shy of the 200dMA retest. Much like ATOM. a lot of upside potential here if this one is played correctly, and a full reversal into the 2020 high would offer very high risk/reward if we time our entry right. Break and close above 2,030 satoshis and I enter, with stops on a close below the all-time low, looking for 6,512 satoshis to be retested as a final target for a leveraged position.
Price: $0.0033 (17 satoshis)
Market Cap: $148.77mn (7,768 BTC)
Thoughts: Siacoin remains close to its range support against BTC, but is getting closer to a breakout against the Dollar.
Looking at SC/USD, from the weekly we can see that price is forming a rounded bottom above $0.0025, with historical resistance at $0.004 capping price. I am patiently awaiting a weekly close back above that level after the false breakout earlier this year, as I expect this to drag the BTC pair up with it and start accelerating towards that $0.0083 resistance area.
Turning to SC/BTC, we can see that the range support is holding for now, with the level having been swept already briefly. I would now like to see 24 satoshis reclaimed as support, along with the 360dMA, to confirm the reversal back to 2020 highs. Break above 45 satoshis and the next major resistance is at 61 satoshis. I have added to my position here at 17 satoshis based on the reaction price got when it swept range support. I will only be exiting if we see the weekly close below 14 satoshis.
Price: $0.089 (464 satoshis)
Market Cap: $12.75mn (665.6 BTC)
Thoughts: Ferrum Network has been one of the winners of recent weeks after the buys at 170-190 satoshis, as described in previous posts. I think this one is only just beginning its next wave of the bull cycle.
If we look at FRM/USD, we can see that price broke back above the pivot at $0.05 and subsequently has rallied incessantly back into resistance at $0.093. This is just shy of the all-time high at $0.11, which I expect to be tested over the next week or so. If price fails here on the first test, we can expect some consolidation, much like in May before price rallied to new all-time highs. My upside target here is at least $0.20, although I am looking for that channel resistance test to potentially mark out the next cycle top.
Turning to FRM/BTC, we remain a fair way away from the all-time highs here, with price yet to flip the pivot at 525 satoshis back as support. Break above that level and I think this pushes for 800 satoshis and then the all-time high at 900 satoshis. HODL. The fundamentals are solid and the market cap is very small. The majority of my position will be held until we see an all-time high retest against BTC at the very least.
Altcoin Market Cap:
Market Cap: $207.64bn (10.84mn BTC)
Thoughts: Altcoins have been consolidating for the past two weeks (at least the large-caps that make up the bulk of the market share), having dropped off for several weeks against BTC before finding a bottom late last month.
If we look at ALT/BTC, we can see this pattern clearly, as the market bounces between the 360wMA as support and the 200wMA as resistance, forming an upwards channel resembling that of ETH/BTC (for obvious reasons). Now, the market is pushing up against prior resistance at present and dipping, but I do expect that November low to hold firm above the 360dMA. From here, I think we see ALT/BTC values consolidate further before expanding to the upside, retesting the 200wMA. If the market can close above that MA, the real alt-season will begin, and I’d expect altcoin dominance to rise significantly for several weeks, with a retest of the June 2017 high my primary target.
Turning to ALT/USD, there isn’t a great deal to say here except that the market is in a strong uptrend and has broken out of its consolidation area, with the next resistance another 33% higher at $316bn (ETH to $790…). The only time to worry for ALT/USD values would be if we break this trendline support and close back below the pivot at $135bn; above that I think this train keeps rolling on steadily until ALT/BTC breaks out.
And that concludes this week’s (and this year’s final) Market Outlook.
I hope you’ve found some value in the read and thank you for supporting my work!
As ever, feel free to leave any comments or questions below, or email me directly at firstname.lastname@example.org.