Market Outlook #11

Market Outlook #11 (17th November 2018)

Welcome to the eleventh Market Outlook.

Well… that was certainly an interesting few days. I did ask politely not to be proven wrong in my claim that we had found a bottom; alas, Bitcoin gives zero fucks. However, despite the bloodbath in BTC/USD this past week, there is a silver lining: this Market Outlook is probably the most exciting in a while for BTC, ETH and XMR, all of which had been range-bound for an age. Further, whilst there was a lot of subsequent blood in alts, the vast majority of the lows that formed in August/September seem to have held firm.

This post will deal exclusively with Bitcoin, Monero and Ethereum, as there is a great deal to get through concerning those three. Where things get real messy is in the somewhat conflicting pictures being painted in ETH and XMR against BTC versus both against the Dollar, as we’ll see…

On with le spectacle:

Bitcoin:

Price: $5618

Market Cap: $97.644bn

Thoughts: *insert well, that escalated quickly gif*

What a week. In last week’s Market Outlook, price looked as though it had successfully retested the breakout from trendline resistance, forming a higher swing-low on the 4H chart. Fast-forward to today, and 11 months of holding above ~$5800 have been undone in a couple of 4H candles. Looking at the Weekly chart, we can see that price has now swept that previous swing-low at $5750, currently hanging above the last bullish orderblock of 2017 by a thread. There is long-term liquidity below $5400, and I would be very surprised if we don’t see that level taken on Bitfinex before catching a bounce. Just below that liquidity is a level of prior resistance at $4970. If this current Weekly candle closes at or below $5750, that’s where I think we’re headed next.

However, looking at the Daily and 4H charts, decreasing volume is apparent; perhaps this particular period of selling is running out of steam, and we may be headed for a short-term bounce back up to prior support now turned resistance between $6100-6200. That area is also the OTE retracement region (61.8%-78.6%) of this current downswing. A less extended bounce could see price move to $5850 before being slapped straight back down to new lows.

However, there is a third and more hopeful case here, and it is predicated on the next couple of weeks of price-action. What we *might* be witnessing is the creation of a Wyckoff Spring, from which we form a longer-term reversal. The liquidity below $5750 and $5400 has been the primary doubt circling my mind when considering a Bitcoin bottom above that former swing-low. It would seem that my convictions were incorrect and I should have known that, no matter what, that liquidity would be swept. The Wyckoff Spring scenario could see further capitulation towards that $5k level before a return to the range above $6k. If that isn’t what is unfolding, and we get a Weekly close here, be prepared for a hell of a fight to reclaim $6000, given the time its taken to break through it to the downside. Fingers crossed for the former, right?


Monero:

XMR/USD

XMR/BTC

Price: $85.82 (0.0155 BTC)

Market Cap: $1.422bn (257,607 BTC)

Thoughts: Monero is in a super interesting spot against Bitcoin and against the Dollar, for different reasons. XMR/USD shows that price has returned to the long-term accumulation range; the range that preceded the Winter bull cycle. Now, whilst this range remains in play, there really isn’t much to worry about aside from intra-day volatility, which is almost entirely predicated on Bitcoin. But the range is large enough to accomodate some volatility: we are currently 12-13% above the range support at $75, and, assuming that XMR/BTC remains stationary, even a BTC/USD move to $5k wouldn’t quite penetrate the bottom of the range. However, a Daily or (god forbid) Weekly close below this range would signify some serious capitulation, as support levels are sparse below that range low.

Now, XMR/BTC is a beauty on all time-frames, offering hope where it may be foolish to anticipate any bullish movement. XMR/BTC has been in an uptrend on the Weekly for almost two years now; it is currently trading inside two Weekly bullish orderblocks; and it is trading within a Daily bullish orderblock, also. This orderblock sits neatly below the initial breakout level – a level that continues to hold firm. I think it would take something entirely unexpected in Bitcoin’s price-action (or in Monero’s fundamentals) in order for XMR/BTC to trade below that 0.013 BTC level anytime soon.


Ethereum:

ETH/USD

ETH/BTC

Price: $173.49 (0.0313 BTC)

Market Cap: $17.913bn (3,235,069 BTC)

Thoughts: If possible, Ethereum looks even more conflicted across its pairs. ETH/USD is trading a little above a Daily bullish orderblock, with the swing-low that formed in September just about holding. Given this positioning, I highly doubt that the low holds much longer, if only to allow price to trade inside the orderblock. If/when price closes below that $167 low, the next major support is at $136… that’s ~20% lower. It gets really messy if price breaks through that support level; the following support is ~$100 – a level of prior resistance. (On the lower time-frame chart, ETH looks like it might be gearing up for a short-term bounce, similar to BTC.) But fear not…

ETH/BTC is granite-like. The Weekly chart shows that price is currently consolidating within a bullish orderblock that sits at a level of prior resistance turned support. Price and volume are flat, as though ETH/BTC has no idea¬† what’s going on in the rest of the market. The Daily chart shows that price has held its short-term range despite all the recent market volatility; but the volume candle looks a little concerning – until you switch to 4H. The 4H confirms that ETH formed a strong bullish close on significant volume, with a move back into the range.

As a side note, this 4H chart is almost forex-like in its fuckery; we’ve got a tight consolidation range, followed by a false breakout to the upside and a subsequent breakout to the downside, followed by a return to the range.

Regardless, ETH/BTC remains more bullish than bearish, despite the short-term trendline resistance that has formed. That being said, I must highlight that any present bullishness or neutrality will swiftly be demolished if that swing-low at 0.0297 BTC gets taken out. Eyes on the following week.

That concludes the eleventh Market Outlook and what has been a fascinating few days. I hope you’ve enjoyed the read! See you next Sunday.


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