Market Outlook #107 (11th January 2021)

Hello, and welcome to the 107th instalment of my Market Outlook.

In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Binance Coin, ZCash, Tron, Band Protocol, Kava, Fantom and Harmony.

As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.

Bitcoin:

Weekly:

Daily:

Price: $31,947

Market Cap: $605.346bn

Thoughts: What a crazy week it has been and despite today’s sell-off, 2021 has been off to a fantastic start for Bitcoin.

If we begin by looking at the weekly chart for BTC/USD, we can see here that Bitcoin pushed higher last week to a new all-time high at ~$42k, around 10% shy of my target of $47k for the first local top since the breakout above $12,500. Volume last week was also significantly higher than the previous week, which shows the health of the trend, but today’s sell-off has pushed BTC back towards the 1.618 extension at ~$30k. Now, it is very early in the week to suggest that this is certainly the local top, and price has already sold off almost 30% from the $42k high, but if we take the previous cycle as a measure of the possible pull-backs before continuation we could conceivably see this sell-off continue towards $25k (which would be 41% from the high) before a bottom is found. If that does occur, I’d expect to see some consolidation occur, potentially above the current trendline support, before continuation in February to new highs. Above, the next target is still $47k, with the area between $47k and $54k likely to find significant resistance, as we approach the $1trn market cap region. It is important to remember that we have spent almost three months straight with consecutive weekly rallies, barely consolidating at all during that time, and we have run over 4x from the October 2020 lows. Whoever expected this trend to continue indefinitely was a fool, as every bull trend needs shakeouts, and it just so happens that we may be getting ours here, a little over 100% higher than the previous all-time high. I would be looking to open low-leverage longs if we sweep last week’s low at ~$27,700, with the next major support below that back at the old ATH.

Turning to the daily, following today’s sharp sell-off, we can see that price has fallen into local trendline support that has held firm since mid-December, with price wicking below the trendline into that $30k area and having bounced since. Importantly, today’s volume is the highest since the black swan event of mid-March 2020, so if we see a daily close above that $33,100 support area, I’d actually be cautiously bullish here, with no reason to expect the trend to turn if support is being respected on significant volume. However, if we close below that trendline, it would be a fairly clear sign that the short-term trend is failing here, and I’d expect price to dump lower to take out that $27,700 swing-low and find some liquidity. Swing-fail that low and I think we’re golden for a bottom, but close below it and I think we’re going for $24,400,  which could find itself having confluence with trendline support depending on the speed of the sell-off. As I said, a sell-off into sub-$25k would be as deep a correction as any in the 2017 cycle, and would be an excellent opportunity to buy spot or open low-leveraged longs. Now, the last thing I’d like to mention here is the possibility of a range forming once we have found a bottom, in order for BTC to be re-accumulated before continuation. In 2017, these ranges only tended to last a few weeks, but if we see something like 2013, in which we had two cycle tops with a more protracted consolidation between them, it may well be months before we take out that high. That’s just something to keep in mind, and naturally that scenario would massively favour altcoin over-exposure.

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Ethereum:

ETH/USD

Weekly:

Daily:

ETH/BTC

Weekly:

Daily:

Price: $974 (0.03042 BTC)

Market Cap: $111.475bn

Thoughts: Just as Ethereum approached its all-time high against the Dollar, it teased us and today’s sell-off has snatched it away from our grasp.

Looking at ETH/USD firstly, from the weekly we can see just how close last week’s continuation took the pair towards the all-time high, testing the highest ever weekly close at $1355 and failing to push beyond it to take out the $1416 ATH. That said, last week was the second-highest weekly volume of all-time on Coinbase for the pair, indicating that the trend is very much healthy and buyers are not disappearing as we approach that high. Since, we have sold off quite heavily, with both BTC/USD and ETH/BTC double-teaming ETH/USD into submission. As we sit up here at $970, I don’t have a great read on the pair, as I’d expect last week’s low to get swept bore we see any reversal, but I’d much prefer a long at $830, given that we haven’t retested that breakout from resistance as support. If we do descend towards that prior resistance over the next week or two, I’d certainly be interested in a larger position for the second attempt at the all-time high. If we front-run that level, the daily will provide more detail on where we can look to get involved. So, dropping into the daily, we can see that, much like BTC, the pair is testing local trendline support at present on the highest daily volume since March last year. There actually isn’t any daily support here beyond the trendline, so if that does fail to support price here I’d expect that $790-830 area to get tagged. However, if we do see the trendline hold, I’d like to see tomorrow sweep today’s low and close back above the trendline to trigger a long entry, looking to hold it for at least a retest of $1160 if not the all-time high.

Turning to ETH/BTC, the weekly closed very strongly indeed, having broken back above 0.031 and pushed into 0.035 where resistance continues to be found, but ultimately closing higher than the previous test of that level closed, and on significant volume. However, today’s reaction to the BTC/USD sell-off has been very disappointing given the inverse relationship we were beginning to see last week. I was certainly expecting ETH/BTC to flourish if BTC looked like it was putting in a top, but the reaction today has been very weak on the lower time-frames. That said, it is only Monday, and as long as we continue to hold above the trendline following the reclaim I think it looks okay. Close the weekly back below that support and I’d expect a retest of 0.0262 at the very least, with 0.023 of course the most critical support to hold above, as any move below that would turn weekly market structure bearish once again. Looking at the daily, you can see how that channel trendline provided support last week, but price failed to pushed above 0.034 and is now losing the 0.031 local support and the 200dMA. If we break and close below 0.029, that 360dMA is absolutely getting retested, and I’d want to see it hold to remain bullish on ETH outperformance moving forward. If we hold above 0.029, I’d expect this week to see another test of 0.035, which I would hope would give way and thus allow for a leg higher into the 2020 high over the coming weeks.

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Cardano:

ADA/USD

Weekly:

Daily:

ADA/BTC

Weekly:

Daily:

Price: $0.246 (767 satoshis)

Market Cap: $7.68bn

Thoughts: Cardano pushed all the way into our target last week against the Dollar, falling just a couple of percent shy before closing the week mid-range between the breakout level at $0.20 and the resistance at $0.41. Looking at the weekly for ADA/USD, I would love to open a new long as close to $0.20 as I can get, with it being both a retest of the breakout area and a test of the parabolic curve. Moreover, last week saw the highest weekly volume of all-time for Cardano, indicating that this one is not done yet by any stretch of the imagination. I’d like to see $0.20 hold and I’d be looking for a breakout above $0.41, above which there is very little resistance until around $0.90. Looking at the daily, we did dip towards that level today but remain a few cents above it, so if we sweep today’s low tomorrow into $0.20-21, I will definitely be looking for longs. The market structure here is very clean and certainly bullish, and Cardano has been leading the majors on many occasions over the past 12 months.

Turning to ADA/BTC, again we have tested resistance above and failed, subsequently pulling back into support at the 360dMA and prior resistance ~700 satoshis. This is where I am buying spot ADA, as my invalidation is clear (the yearly low below 575 satoshis) and my target is the 2020 high at 1600 satoshis. The fact that we area around support for ADA/BTC whilst ADA/USD trades towards an interesting area for a long gives me confidence in potentially taking that leveraged position in the latter pair over the next couple of days, should it come. As has been the case since October, 950 satoshis is the most important level capping ADA at present; when that gives way, I expect it to charge through to the 2020 high.

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Binance Coin:

BNB/USD

Weekly:

Daily:

BNB/BTC

Weekly:

Daily:

Price: $36.85 (0.00115 BTC)

Market Cap: $5.27bn

Thoughts: Binance Coin has been one of the worst hit by Bitcoin’s winter ascent and I’m not sure it looks like reversing quite yet.

If we begin with BNB/USD, we can see here that market structure on the weekly looks fairly healthy, although price last week broke to a new all-time high at $48.38 but then closed below the prior ATH at $43.60, printing a weekly swing-failure. Since, we have seen price fall back towards the prior resistance turned support at $34.20 that capped the pair through Q4 2020. We have also taken out last week’s low, which is positive should this weekly close above $34.21, as I’d expect breakout longs to have been stopped, providing fuel for new highs. If we drop into the daily, we can see this structure more clearly, with the trend remaining healthy and pointing upwards for the pair. If we did close below $34.20, the next area of interest would be the prior cycle high confluence with the 200dMA at $27, where I would definitely get long for a bounce. However, there is not much point being long BNB/USD, if BNB/BTC isn’t looking like reversing; we may as well just be long Bitcoin.

So, looking at the BTC pair, we can see that price has sold off for almost 13 consecutive weeks, reaching the lowest weekly RSI reading of all-time and breaking below the late 2018 low at 0.0012. Now that that low has been taken out, this is where I would expect the pair to form a bottom, but I’m not seeing signs of that yet. If we drop into the daily, we can see that the pair remains capped by trendline resistance and continues to make lower-lows and lower-highs; until we see 0.00121 reclaimed as support and a series of higher-lows and higher-highs form, I am not interested here.

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ZCash:

ZEC/USD

Weekly:

Daily:

ZEC/BTC

Weekly:

Daily:

Price: $84.20 (0.00253 BTC)

Market Cap: $921.309mn

Thoughts: ZEC sold off significantly following Bittrex’s delisting news for privacy coins, but last week showed that buyers are turning up again for the coin.

If we look at ZEC/USD, we can see that price wicked below the triple bottom at $49 into support at $45, closing back above it, consolidating for a week and then printing a bullish engulfing on significant volume last week. Price closed above the prior swing-high at $90.60, pushing up into resistance at $106 but failing to break above it. Since, price has retested the initial breakout area at $73.30, which I would expect to hold given the sweep of the triple bottom, which opens up the potential for more upside and possibly the breaking of the neckline of the inverse H&S that has been forming since December 2018. Should we see a break and close above $106, I’d expect the pair to continue towards $245 over the subsequent weeks. Turning to the daily, for those not involved, this area between $73-90 looks like a good area to get long on low leverage, with a stop below the 2021 low.

Turning to ZEC/BTC, here we can see how that Bittrex news sent ZCash crashing down below range support into capitulation at 0.0016, where it bounced last week on good volume. The first test here would be that range support turned resistance around 0.00368; if the pair can get back above that level, I think we will see ZEC rally to the other side of the range, which is another 100% from range support. Looking at the daily, the volume coming in here is a very good sign for a reversal, but we need to see it either break out of trendline resistance or form a higher-low and a subsequent higher-high from here to confirm this. If we see that, long your longs till kingdom come.

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Tron:

TRX/USD

Weekly:

Daily:

TRX/BTC

Weekly:

Daily:

Price: $0.028 (83 satoshis)

Market Cap: $2.01bn

Thoughts: Tron has been in a tight consolidation range against the dollar for a few months now, with its BTC pair having been decimated in recent weeks (and thus stopping me out of my spot position in it).

If we look at TRX/USD, this range becomes evident, with $0.0216 as support and $0.027 the pivot with which price is constantly wrestling. We have now seen several consecutive weekly closes above this pivot, but price is failing to move out of the range towards the 2020 high. If we look at the daily, we can see that price is effectively just riding the 200dMA for now, slowly making higher lows but not really going anywhere. You could conceivably open a long here as we know the 200dMA is being respected, with the expectation of $0.047 being retested sooner or later. However, again, it depends on how the BTC pair looks as to whether this makes any sense.

Turning to TRX/BTC, we can see that price broke below range support at 134 satoshis and fell 50% into historical support at 70 satoshis, where it has bottomed for now, and whilst we re seeing some bullish divergence, I would first like to see the daily print a higher high and turn market structure bullish before I take any leveraged positions in the dollar pair. When we see that, I am definitely keen, as this scam runs hard when it runs. Break below 70 satoshis to a new low and the next support is the all-time low.

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Band Protocol:

BAND/USD

Daily:

BAND/BTC

Daily:

Price: $7.76 (0.000228 BTC)

Market Cap: $159.07mn

Thoughts: Band Protocol had a fantastic 2020, and following a multi-month bear cycle and consolidation, it looks ready for a reversal.

Looking at BAND/USD, we can see that price found support at $5.26 before sweeping the low and reclaiming that support in November. Since, price has been rangebound between $5.26 and resistance t $7.65, before breaking back above $7.65 last week. Now, we’re retesting the 200dMA and the range resistance, and I’m interested in buying here, now that market structure is bullish and the trend appears to be pointing higher again. If we can hold above the 200dMA, I’d expect to see price trend towards that all-time high over the coming weeks. If we break back below the MA and back inside the range, I think we retest $5.26; fail to hold above that and it looks ugly, with the 360dMA the next support below.

Turning to BAND/BTC, we remain capped by trendline resistance but have printed bullish divergence and so the pair is looking interesting. I would now like to see a push above the trendline, reclaim support at 0.000287 BTC, and close above the 360dMA. That would be my confirmation signal for a period of outperformance from BAND. Fail here and I think we see 15.3k satoshis tested as support.

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Kava:

KAVA/USD

Daily:

KAVA/BTC

Daily:

Price: $1.50 (4395 satoshis)

Market Cap: $70.432mn

Thoughts: Kava looks a bit like BAND except lagging a week or so, particularly against the Dollar.

If we look at KAVA/USD, we see a similar range having formed, with support at prior resistance around $1.30 and resistance at prior support and the 200DMA around $2.07. Price remains within this range, and until we see a breakout and close above the 200DMA I am not interested. If we break lower, I feel for Kava holders, as the next support is at $0.77. Break higher as I expect we will and I would be riding this all the way to the all-time high at $5.81.

Turning to KAVA/BTC, price has fallen significantly from the all-time high in August 2020, falling over 90% and taking out the May low at 4894 satoshis. This is a very similar pattern to that which I posted on Twitter regarding NXT in late 2016, where we saw a test pump from an accumulation base, followed by a full retrace as Bitcoin broke its $1150 all-time high in January 2017, followed by consolidation at a new low and then a new bull cycle in the subsequent months back to the all-time high and above. I’m not saying we’ll see exactly that play out for Kava, but these newer alts stand the best chance of seeing such ridiculous reversals in my opinion. I’d like to see the pair range here below the prior all-time low and then reclaim it as support before I enter a spot position, looking for as much of that cyclical reversal as I can get.

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Fantom:

FTM/USD

Weekly:

Daily:

FTM/BTC

Weekly:

Daily:

Price: $0.0021 (61 satoshis)

Market Cap: $54.217mn

Thoughts: Fantom is another one that had a great 2020, rallying almost 40x against the Dollar from its March low before putting in an all-time high in August at $0.059, then retracing the bulk of that into support at $0.015 in November where it formed a range. Price then wicked below this support and closed back above, and the pair has been range-bound between $0.015 and $0.024 since, with last week just about closing above range resistance. I think this once has another run at all-time highs in it from here, and I am rebuying my spot that I sold back in late August here.

If we look at FTM/BTC, we can see that the pair has retraced all the way to its base from Q2 2020 above its all-time low, and it could well take out that ATL before reversing, but I am willing to start rebuying here and averaging in lower, as this is a fundamentally sound project. If we break below the all-time low, I will buy more until I reach my fixed capital allocation; from that point, moon or die. It may well take several more weeks of consolidation down here before we get that reversal, but I am confident it will come for this one.

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Harmony:

ONE/USD

Daily:

ONE/BTC

Daily:

Price: $0.0061 (18 satoshis)

Market Cap: $50.308mn

Thoughts: Harmony, much like BAND, has broken above its consolidation range against the dollar and is now in bullish market structure, with a higher high having been printed above $0.0073. We have since dumped back into the range, providing a good buying opportunity for me, who has never owned ONE but will be taking advantage of this retest. My stop loss here is a break below support at $0.038. If we look quickly at the BTC pair, we can see that, beyond the test pump of 2020 that took its from its then-all-time low at 25 satoshis to resistance at 125 satoshis, Harmony has been in a bear trend its entire history, and has since broken below that base (like Kava) and formed a new all-time low at 12 satoshis. Risk-averse buyers can await a reclaim of 25 satoshis before entering, but I am happy to buy here.

And that concludes this week’s 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 nik@altcointradershandbook.com.

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