Market Outlook #109 (25th January 2021)
Hello, and welcome to the 109th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Polkadot, Chainlink, Binance Coin, Tezos, Cosmos, Compound, Algorand, Band Protocol and Tellor.
As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.
Market Cap: $597.475bn
Thoughts: Given the past week of price-action in BTC/USD, you’d be forgiven for being uncertain on short-term trajectory, but the fact of the matter – as explained in last week’s Outlook – is that bullish market structure remains intact.
If we begin by looking at the weekly, we can see that price swept the low of the previous week but closed back above it. As we know, that previous week was an inside week and following Sunday’s close we printed inside week failure. The likelihood from here is that we take out the top of the inside weekly range (below the all-time high at $40,050) before any potential downside. We also remain above trendline support from October, so for now the bias remains bullish. Break below $27,700 and it is a different story, but until that occurs there is no reason to turn bearish, in my opinion.
If we look at the daily, we can see that price broke below what was a pennant, as depicted last week, and printed the swing-failure we wanted to see at $30k to keep bullish market structure intact. The low got swept but price held above that $27,700 low, pushing higher to close the daily at $33k. There is still trendline resistance from the all-time high to contend with, but I am expecting BTC to consolidate and push higher from here based on current market structure, with $40k more likely than $27k in my opinion. Volume over recent days has fallen off, so I’d like to see that begin to tick upwards again if price does push on from here. As I said, $27,700 is the line in the sand at present between bullish market conditions and bearish market conditions for the forthcoming weeks – of course, macro market structure remains bullish and we are very much simply in the first major dip of a bull market.
Price: $1415.31 (0.0413 BTC)
Market Cap: $159.524bn
Thoughts: Ethereum finally – after months of discussing the level in these posts – got the breakout we’ve been waiting for against BTC.
Beginning with ETH/USD, however, we can see that price has taken out last week’s new all-time high today, with the new all-time high coming in at $1478. Volume remains high but declining from the push into $1350 a few weeks ago. Looking at this, a lot is going to depend on how the rest of this week goes; given that we have now broken a clear new all-time high, I would not want to see this week (and thus this month) now close firmly below it in order to remain bullish short-term. One caveat is that when Bitcoin broke the all-time high at $1150, it too poked above and closed below, leading to a couple of months of consolidation before it ran to $3k in a few weeks. As such, it wouldn’t be surprising to see a (potentially shorter) period of consolidation for ETH should it fail to now close January above ~$1416. However, that is making the assumption that we don’t now rally into new highs over this coming week, which is – in my opinion – the more likely scenario; one that opens up the potential of $2,200 being tagged in Q1, as the 1.618 extension of the bear market. Now, turning to the daily, there are some short-term bearish signs beginning to appear, but we know how these can swiftly be invalidated in this market so until they are confirmed I am simply monitoring them. The first of these is the obvious bearish divergence printing on each push higher above $1350. Should we close today below last week’s high after sweeping it, this would be another bearish signal on the daily timeframe, particularly given that we are retesting local trendline support as resistance here. Now, should we see short-term bearishness take hold here, I would relish the opportunity to go long ETH/USD at $1,038, sweeping that most recent low possibly. If today closes above last week’s high, I’d be fairly comfortable in expecting any dip to be much milder and for price to continue higher towards $1500 this week.
Now, looking at ETH/BTC, after months of waiting, we have finally broken and closed above 0.042. This has been an important level for quite some time, having capped the pair in 2019 and failing to give way in 2020 as price rejected at 0.0406. Last week, we closed at weekly highs on good volume, closing firmly above the level. For me, this confirms a move up into 0.0536 at the very least, but what is particularly interesting is that we bounced at 0.023 at the turn of the year, and the subsequent price-action has been almost identical to that of December 2017 to January 2018, albeit at a slower pace. Back then, the bounce from 0.023 took ETH/BTC to 0.124 inside two months. It may well be that the long-term reversal begins to accelerate from here following the move above 0.042, with 0.086 the next major resistance above 0.053. Any pull-back into 0.0373 from here would absolutely be a buy, should we get it. The implications of all of this are straightforward – a period of outperformance by alts against BTC. Enjoy it.
Price: $18.17 (54,982 satoshis)
Market Cap: $16.434bn
Thoughts: Polkadot has been on quite the run since December, breaking out of $6.80 resistance just before the New Year and running to its current all-time high at $20 just over a week ago. As we can see from DOT/USD, the pair looks to be consolidating between prior resistance turned support at $14.50 and the all-time high as resistance, much like it did following the $6.88 breakout before expansion. That first leg higher into $11.20 then led to a move into the 200% trend-based extension at $20. If we take the low of that range at $6.88 > the all-time high > the current range low at $14.54, we might expect the next major resistance to come at $27.60. The bearish scenario would be for price to close below $14.50 on the daily, turning market structure bearish and opening up a move back into $11.
Turning to DOT/BTC, we can see that the pair is pressing right up against the all-time high as of last week at 60,500 satoshis, though it has come off a little since and is now retesting prior resistance as support. Again, there is no reason to be bearish on DOT for me here, unless it breaks down below 43,220 satoshis, turning market structure bearish and opening up the move back into 36k satoshis or potentially lower at 32,200 satoshis, where it would be a buy. Looking above, there is a confluence of fib resistances above around 75k satoshis, which would be another 33% or so from here.
Price: $24.37 (74,319 satoshis)
Market Cap: $9.899bn
Thoughts: LINK broke to new all-time highs again last week after its impressive close the prior week.
Looking at LINK/USD, we can see how price dipped into the prior weekly range before closing well above, close to $24.50, where it currently sits, though it peaked at $26.80. The trend extension from here has the next major resistance at $41, and I will be buying any LINK dip from here into that prior all-time high at $21. If we look at previous ATH breakouts, we can see that we got a 215% rally followed by a 336% rally, so 100% into $41 is very much a possibility over the coming weeks. Turning to the daily, the first thing to notice is how much further RSI has to run to the upside to reach previous extremes that marked out tops. As for dip-buying, either the prior ATH or a dip into trendline support would be fantastic, with a stop below $17.20.
Turning to LINK/BTC, we are at a very important area here, as price has pushed ~100% from the lows at the beginning of the month and rallied right into the prior historical trendline support. If LINK can reclaimed this trendline, that would be a huge signal for bulls as to the demand here, but it is likely we see a period of consolidation here before any further upside. Looking at the daily, we are also just shy of the 200dMA above and I’d be looking for a move into the 360dMA to retest it as support as an opportunity for a long. Get back above that trendline and the next major resistance is at 97k satoshis.
Price: $43.17 (0.00127 BTC)
Market Cap: $6.56bn
Thoughts: Binance Coin has been an under-performer, as we know, but the tide looks close to turning for it as it approaches a key level against BTC.
If we begin with the USD pair, we can see that price is consolidating around the all-time high, having wicked down into prior resistance turned support at $34 twice and shot back up. I am taking a spot position here with a stop below the pivot, ~$32, with a target of the 1.618 extension of the trend at $69.80. Turning to the daily, we can more clearly see the range that has formed between prior resistance turned support at $34 and the all-time high at $48. Moreover, the 200dMA has been supporting the trend higher since last summer, so should this trade setup fail I would rebuy my spot on a test of that level.
Turning to BNB/BTC, finally the pair has broken out of trendline resistance that has capped it since late last year, with the pair also reclaiming the prior cycle low at 0.00121. Dropping into the daily, I have highlighted the 0.00129 area as key for continuation of the reversal, as this has been a level of support recently that became resistance. Printing a higher-high above it here would confirm the bullish structure for me and that’s when I’d look for confluence to add to my BNB/USD position, with the next resistance for the BTC pair all the way up at 0.01165. Fail here and lose 0.0012 and I think the 2021 low will be retested as support.
Price: $3.05 (9,340 satoshis)
Market Cap: $2.356bn
Thoughts: Looking at XTZ/USD, from the weekly we can see that market structure is most certainly bullish, with two consecutive weekly closes above the previous swing-high at $2.97. Looking above, the next resistance is the February 2020 high at $3.95, and I’d be looking to add to my Tezos position on dips with a target just shy of that for the first sells. On the daily, the retest of the 200dMA and 360dMA confluence held as support, allowing price to push higher over recent days. Much like LINK, I’d be looking for a test of trendline support as a solid area to add to my long.
Turning to the BTC pair, we can see that last week brought the breakout above trendline resistance from September, as well as a reclaim of range support, opening up a move into 12k satoshis over the next couple of weeks. Get back above 12k satoshis and I actually think this reverses all the way into 24k satoshis this quarter, which would be a huge move to capture and lines up with a 360dMA retest as resistance. Buy on dips whilst it continues holding bullish market structure.
Price: $8.23 (24,540 satoshis)
Market Cap: $1.729bn
Thoughts: Looking firstly at ATOM/USD, this is one of the earlier majors to have broken new all-time highs, and much like BNB it is now consolidating below that high, having dumped into prior resistance turned support at $6.45 and bounced. I’d like to see this most recent low hold in order for market structure to remain bullish, with the next resistance above at $12.15; the 1.618 extension of the range. There’s not a lot else to add here, as both fundamentals and technicals are pointing to further upside for Cosmos.
Turning to ATOM/BTC, this is where things get interesting for the pair, as we have swept the all-time low at 17,900 satoshis into a new low at 14,470, then rallied back into the 2020 support turned resistance at 25.6k satoshis, which is where we are now consolidating but have failed to break above. If we see the daily close above 27k satoshis, this thing is going to fly higher into the confluence of resistance at 37k satoshis, which would no doubt drag ATOM/USD much higher too. Fail here and close back below the trendline and it will start to look quite bad, which again will very likely be reflected in the USD pair. Let’s see what happens here…
Price: $251.35 (0.00748 BTC)
Market Cap: $1,081bn
Thoughts: I recently exited my Compound long (half at 245 and half at 261, as tweeted yesterday), but, having looked at the longer-term picture, this appears to be one I’ll want to rebuy on any dip.
If we look at COMP/USD, we can see that price has pushed into significant resistance overnight at $272, which has capped price since last July. I don’t expect it to give way today, but if we dip into the prior cluster of daily closes below $240 (towards $220 or lower), I will be happy to take a low leveraged long with a stop at $161, looking for the 1.618 extension at $349. As we can see, there have been numerous dip-buying opportunities throughout the rally from the all-time low at $78 and the trendline support does often get tested before new highs are taken, so an even deeper dip into $185 would be ideal to get long.
Turning to COMP/BTC, the pair has reclaimed the support base at 0.0055 and pushed higher, confirming the 2021 low at 0.0039 as the likely cyclical bottom and bear trap. We are now pushing into resistance, so I’d expect a dump lower from here before continuation higher, which may provide us the opportunity to get long COMP/USD. Looking above, the next major resistance will be at around 0.0095-0.01, which has confluence with the 200dMA.
Price: $0.61 (1805 satoshis)
Market Cap: $769.07mn
Thoughts: ALGO has been looking more and more bullish as the days go by recently and, as mentioned in recent Outlooks, it has began to reclaim support levels against BTC.
Beginning with ALGO/USD, we have held firm above $0.48 and look ready to push for the 2020 high at $0.78, which should be tested in the next couple of weeks. Break above that and there is major resistance around $0.91, with the 1.618 extension at $1.32 providing more resistance should we breakout of this range below $1. Whilst ALGO holds above $0.50, there is no reason to be bearish on the pair, in my opinion.
Turning to ALGO/BTC, here we can see that 1433 satoshis was reclaimed as support, leading to a push into resistance at 1870 satoshis, below which it currently sits. I’d like to see any dip into 1560 satoshis to hold as support, with the next leg higher likely to take the pair into the range support turned resistance at 2030 satoshis, which will be the major test for the reversal. Break above that and I’m still looking for that 25% clean rally into the next resistance at 2600 satoshis.
Price: $9.95 (29,135 satoshis)
Market Cap: $207.88mn
Thoughts: Given the recent breakout to new all-time highs on LINK and the subsequent action on other oracles, it is very likely that oracle-season has returned. As such, I have been building a long position in BAND, which remains some way off its all-time high but is beginning to print a parabolic curve on its USD pair.
So, looking at BAND/USD, we can see that the 200dMA is holding firm as support, in confluence with the breakout area at $7.65, and as long as the pair holds above that resistance turned support I am expecting it to push higher towards $14.80 as the next resistance over the coming days. If the parabolic advance holds, the pair should breach the all-time high at $18 by March. Onwards and upwards.
Looking at BAND/BTC, we are at a pivotal point for the pair, with it retesting both prior support and the 360dMA at ~29k satoshis as resistance. I’d like to see it close above both to confirm the reversal and support BAND/USD, with the next resistance above at 47,560 satoshis – prior resistance and the 200dMA. If we fail here, it is likely that 23,500 satoshis gets retested as support. Break below that and it will be ugly…
Price: $32.12 (94,300 satoshis)
Market Cap: $54.068mn
Thoughts: Again, like BAND, I expect Tellor to do well as a smaller oracle project following LINK’s all-time high and the 12-month Google search all-time high for “next Chainlink”.
If we look at TRB/USD, the pair has recently broken above, retested and held the 200dMA and prior support at $24.50, and is now pushing up against the double top at $34.85. Break out above here and I’d be a buyer of spot with a target of the all-time high at $89, and a stop on a daily close below the 200dMA. Fail here, and that $24.50 support will have to hold or the 360dMA at $16 is getting retested.
Turning to TRB/BTC, much like BAND we have broken above trendline resistance but remain below key resistance at 98k satoshis, which would be the level to buy should it get flipped as support; the breakout above this historical all-time high in July 2020 led to the rally into 780k satoshis. Plenty of upside here for Tellor if it can confirm this reversal – let’s see.
And that concludes this week’s Market Outlook.
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