Market Outlook #113 (22nd February 2021)
Hello, and welcome to the 113th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, EOS, Tezos, Ren, Ankr, Fetch.ai, COTI, Fusion, Ubiq and WeOwn.
As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.
Market Cap: $987.347bn
Thoughts: Well, not only have we just closed out another momentous week but this week has begun with quite the corker.
Beginning with the weekly, we can see that Bitcoin traded into another all-time high last week at $58,367, closing out the week right at the high – as bullish as you like. Further, given that we were looking at the $1trn market cap area ~$53.5k (confluence with the 300% extension of the bear market range) as an area of potential significant resistance, the weekly close firmly through the level was indeed impressive.
However, we are entering dangerous territory up here solely due to the steepness of the rally, and this morning’s price-action has highlighted what happens when the market is over-leveraged and expecting ‘up only’ to be without exception. Now, looking at last week’s close, it does not look like a local top, like that of the previous one at $42k, where we wicked into the high but ultimately closed much lower. Here, we have a weekly candle very much like the one that preceded that $42k range high candle – firmly bullish. As such, it may well be that today’s liquidation event (which I will discuss with more detail when we look at the daily) was simply that – a swift but brutal fuel stop before the next push higher. If that is the case, we can expect price to push on for $63,800 later this week. That said, volume on Coinbase continues to trend down and if the previous leg higher into a range is anything to go by, $64k may well cap BTC for several weeks. To see that scenario play out, I’d like to see BTC V-reverse from today back above the all-time high and continue squeezing higher at its current parabolic rate, and I’d like to see significant rejection in that $63.8k area leading into the weekly and monthly close on Sunday. Ideally, a push into $64k followed by a weekly close below last week’s high at $58,367 would likely mark that local top.
I want to be clear that this is not a bearish scenario for Bitcoin because we *need* periods of consolidation in order for the rally to continue to have legs; otherwise, it will overheat, blow-off into $80-90k within a matter of weeks and then have very little buy support on the way back down until it reaches that $42k range. That’s not the scenario you want to play out if you’re a bull. What we want to see is a local top in the next couple of weeks, followed by a ~25% correction, and then continued upside following trendline support on the weekly. That will establish a new area of support at whatever the high might be that marked out that local top, which will allow BTC to continue pushing on towards $100k without looking overheated.
This is all theoretical, of course, but I’m simply relaying the thoughts I’m currently having looking at the BTC/USD chart. Up only is great, but I want up only for the longest possible period before a bear market.
Now, turning to the daily, firstly observe the fractal I have copied in from the previous range. I am not expecting an identical fractal of price-action to play out, but something similar would be healthy following a flush of that all-time high at $58,367. That would provide plenty of time for RSI to reset and for the trendline support from October 2020 to be retested, as well as potentially the prior range, though I expect this would be front-run. However, today’s price-action has sent price from that all-time high down into $47k on Coinbase – effectively a 20% correction in one day. Moreover, as per Bybt, over $3.5bn of longs were liquidated in the past 24 hours and almost $5bn in the past 48 hours – the largest liquidation event potentially of all-time nominally, though I haven’t found data for this. It is certainly the largest liquidation event in the past few months. On the sell-off, BTC dumped straight through prior resistance at $48,600, wicking well below more recent trendline support from the beginning of the month; it has since reversed hard, retracing back towards $53k. If you look back to early January, you will notice we saw a similar liquidation event occur that took out many longs before price recovered to new highs with a couple of days, ultimately pushing on into that $42k are before making a local top. If today closes above trendline support and prior resistance at $48,600, I’d expect something similar to occur, particularly in the context of how many longs have now been taken off the table and who will undoubtedly chase it higher having been liquidated. Again, that scenario could well lead to one final push above the all-time high before marking out a local top; if it doesn’t reject up there and the current trendline support continues to hold firm, acceleration is the only path forward, and that’s a little bit scary given that the current trajectory would have price at $90k by the end of March. I think this is highly unlikely and we are probably going to see a local top form very soon.
Looking at the longer-term picture, as long as price remains above that previous range at $42k, I don’t see any reason to be bearish or to expect the cycle to end. Further, as long as do see another period of consolidation as opposed to just consecutive weeks of pushing higher from here, I am very much expecting $100k to be tested in the first half of this year. Beyond that, I have no idea, but I’ll be monitoring the weekly chart and on-chain flows to get a better idea of where to begin exiting and relay that information here. For now, I am looking at $87k and $97k as the areas where I will sell a significant amount of spot.
Price: $1726.38 (0.0324 BTC)
Market Cap: $195.549bn
Thoughts: Ethereum has been struggling recently and has seen its weekly ranges against the Dollar tight following the break above the prior all-time high at $1440.
Looking at ETH/USD, we can see that last week did see price dragged higher to a new all-time high at $2042, albeit on declining volume once again. It remains within spitting distance of what should be the first major resistance area at $2278 but its lethargic march is not particularly inspiring and the pair appears to be awaiting an ETH/BTC bottom to really propel it forward. Above $2278 we have the 200% extension of the bear market at $2800, but there’s a long way to go at this rate before we test that level. That said, if we drop into the daily, today’s dump into $1500 swept local lows at $1650 and retested the original breakout area as support, as well as local trendline support that has held firm this year thus far. This may well be the confluence of supports required to now push ETH out of its slumber into more emphatic price discovery, but this will no doubt be driven by ETH/BTC reversing, whenever it does. The bearish scenario here for the pair would be to close the daily below $1650, thus turning market structure bearish (lower-low), and I’d expect another test of $1500 to follow; fail to hold up there and break down below trendline support and it will start to look ugly, with the prior all-time high as the last stand.
Turning to ETH/BTC, as mentioned in recent posts, that 0.033-0.034 area has been a key pivot in recent history, and if we look at the daily chart we can see this more clearly. Further, the area has confluence with the 200dMA, and today’s sell-off in dollar pairs was compounded by ETH/BTC also driving lower into that 0.0328 pivot and 200dMA. In fact, it wicked as low as the 61.8% retracement of the entire move up from 0.023 at 0.0318. This should be the area in which we see some signs of life, with plenty of confluence for a potential bottom, particularly with the reclaimed channel support just below. I am now paying attention. What I’d like to see from the pair here is a close above the 200dMA followed by potentially a second sweep of the area tomorrow to flush early longs; irrespective of that, I want to see demand come in in this area early this week, pushing the pair above trendline resistance from the 2021 high. If we see that, I’d expect 0.037 to be retested as resistance; climb back above there and we have our bottom. However, if this confluence of support fails to hold the pair up, we may see that 0.0312 area retested as support. Break below that and it is ugly, as the next support is down at 0.0287 and we’ll have lost the reclaimed channel support. Nonetheless, if demand steps in hard at that 360dMA, I’ll remain cautiously bullish on ETH outperformance for 2021; if it fails at 0.0287 also, it is likely we retest the lows at 0.023 and potentially change the macro trend. Until then, I have no reason to expect a 14-month uptrend to end just yet…
Price: $0.55 (1035 satoshis)
Market Cap: $25.356bn
Thoughts: If we begin with XRP/USD, we can see on the weekly that the pair traded an inside week last week, tightening the range but holding above prior resistance at $0.51. Today, we have wicked above that prior weekly high and should the pair close back inside that prior weekly high, it is likely we take out the bottom of the range also at $0.48, but there is a long way to go until that weekly close, and so for now I remain bullish and expecting that $0.78 triple-top to get swept sooner rather than later. Looking at the daily, we actually took out the low at $0.48 last week and closed back above it, so there really should be no reason to sweep the low again if we are to remain bullish, and the fact that $0.51 is holding as support (notice how the daily has failed to close back below despite numerous attempts) provides confluence. If we do break down here (possibly due to BTC/USD taking another dive), then that 2017 range high is the next point of interest at $0.40, which would make a good spot for a bounce play. Until then, I think this continues higher this week into $0.66, and once we get a daily close above that level it is clear skies into $0.78.
Turning to XRP/BTC, here we can see from the daily that price has swept the most recent low at 950 satoshis into the breakout area at 860 satoshis. I mentioned last week that, because we had seen the pair print a higher high after the low at 950, I didn’t really want to see the pair trade lower again, but we do appear to be having some reaction here and that 860 satoshi area now has to hold for XRP to remain looking bullish. If we see a daily close below that level, I’d expect the entire rally to be retraced back into the yearly low at 620 satoshis.
Price: $4.58 (8534 satoshis)
Market Cap: $4.41bn
Thoughts: Beginning with EOS/USD, we remain in consolidation at resistance and the pair just looks primed for a breakout and second leg higher into the next resistance at $8.82. Volume being traded in this tight range around $5 remains at all-time highs and prior support at $4.56 appears to be holding firm. What we don’t want to see is the weekly now close back below $4.56, as this would be rejection of a move above the range resistance and we’d likely need to refuel lower for a retest. If we look at the daily That $4.56 area has been tested on numerous consecutive days as support with rising lows and it is failing to give way, with the range contracting as $5.57 refuses to give way either. I am still long from last week and I’d like to see the daily close above $5.57 to open up that larger move into $8.82. Again, close that weekly back below $4.56 and I will manually exit my position.
Turning to EOS/BTC, despite looking like a perfect retest of the breakout area early last week, we ended up closing back inside 912 satoshis, now retesting that level as resistance. This isn’t ideal, but 789 satoshis remains the higher-low and market structure is still bullish. I’d want to see buyers step in here and send the pair back above 912 satoshis, confirming another higher-low and allowing EOS to push higher towards 1187 and potentially 1400 satoshis. Not much else to add here except that, if you are on the sidelines and wanting a spot position, this may not be the worst area, with invalidation so close on a daily close below that prior swing-low.
Price: $4.31 (7973 satoshis)
Market Cap: $3.256bn
Thoughts: Tezos has recently rallied to new all-time highs but failed to break out of long-term channel resistance against the Dollar.
If we begin by looking at XTZ/USD, we can see this on the weekly chart, with a strong impulse candle taking the pair to new highs at $5.60 but ultimately closing below channel resistance and the 100% extension at $5.16. The pair did manage to close firmly above the prior all-time high on good volume, however, at 44.52, and last week saw consolidation close above this high once again. If we can close this week above that prior all-time high again, I’d expect a retest of the all-time high at $5.61 to follow, and any break above that level to lead to acceleration into the 1.618 extension at $7.37. Close back below $4.56 and I’d consider the breakout a failure, with $3.40 the next area of support below to retest.
Turning to XTZ/BTC, though the pair did manage to close back above 9110 satoshis the week before last, reclaiming historical range support, it has since closed back below the level and is retesting the June 2019 low at 7500 satoshis as support. This is a must hold, as there is air between that level and the all-time low at 5640 satoshis; start closing below 7500 and I’d expect that ATL to be swept before another reversal is attempted. Get back above 9110 satoshis and I think Tezos is in a strong position for continuation higher, with a retest of 12k satoshis the major test before expansion into reclaimed resistance at 14.6k satoshis and beyond.
Price: $1.27 (2365 satoshis)
Market Cap: $1.256bn
Thoughts: REN, unlike many other majors at the moment, has a very clear direction: up.
If we look at REN/USD, we can see from the weekly that last week closed strong, having expanded the weekly range significantly after several weeks of tighter consolidation above the prior all-time high at $0.59 (something we can perhaps expect from ETH/USD in a similar manner moving forward). The pair wicked as high as $1.92, just shy of the 4.618 extension of the re-accumulation range, but ultimately closed at the 300% extension ~$1.39. Since, it has moved a little lower with the rest of the market, though not considerably lower, and I am expecting any dips to be short-lived, as this is pure price discovery mode. In fact, any dip into the $1 area would provide a great opportunity to get long, with a target of $2 and $2.56 above that. If we look at the daily, we can see prior resistance being flipped as support here, so we may not even see a deeper retracement into $1, but if that trendline support retest comes, I’ll be buying it.
Turning to REN/BTC, last week closed with a bullish engulfing through an area of prior resistance at 2164 satoshis. Bulls want to see the pair hold above this level as reclaimed support, with the next major resistance being significantly higher at 3775 satoshis. Looking at the daily, we can see the structure more clearly, with the pair flipping the 200dMA as support after several failed attempts this year. This is the perfect dip buying area for spot, with invalidation on a daily close back below 2160 satoshis. If it can hold above, 3323 will give way sooner rather than later, with the all-time high not far off above that.
Price: $0.0316 (58 satoshis)
Market Cap: $202.65mn
Thoughts: Ankr has been doing very well of late since my early 2021 rebuys and I am now looking for further expansion on the BTC pair.
If we look at ANKR/USD firstly, we can see that all-time highs at $0.019 gave way earlier this month and since the pair has continued higher into the 200% extension at $0.04, where it found resistance today. Nonetheless, the trend remains intact and I’d expect to see Ankr push higher again over the next week, with $0.052 the next major resistance. If we start breaking down below trendline support, I’ll look to exit my position, but whilst ANKR/USD remains trending higher I see no reason to shave anything off yet.
Turning to ANKR/BTC, as can be seen here there is plenty more upside given the trend we are seeing of coins retracing to August 2020 highs vs BTC. The test here for Ankr is reclaiming that 200dMA as support; once that is flipped, I think 85 satoshis gets retested as resistance and price will likely take a breather there before pushing on for that complacency shoulder at 125 satoshis. If you are on the sidelines, invalidation would be for the pair to break back below 43 satoshis, in which case I would expect another 30% dump back into 32 satoshis at the very least.
Price: $0.26 (492 satoshis)
Market Cap: $197.82mn
Thoughts: Fetch.ai has been one of the better plays of the past year, having ridden it through its first cycle into August 2020 and then rebought in December around 200 satoshis. I think this one has the potential to really move this year given how much upside there is on its BTC pair.
Looking at FET/USD, we can see that unlike most Binance IEO projects (or even any newer lowcaps and midcaps) it has yet to break new USD all-time highs, though it has recently flipped the 2020 high and prior resistance at $0.20 as support. For now, the confluence of resistance at $0.35 is capping the pair, but a weekly close above that level will send it to new all-time highs at $0.54 swiftly after; once the USD pair enters price-discovery, the BTC pair will really kick into gear. Targets above are the all-time high, followed by $0.72 and $0.91, then of course the $1 area. The bearish scenario here would be to retrace back below the 2020 high and close the weekly below, at which point I’d exit my position.
Looking now at FET/BTC, the pair is clearly still near its original accumulation range, having re-accumulated within it, bumped the low and since broken higher on rising volume. Dropping into the daily for some clarity, the pair has reclaimed both the 360dMA and 200dMA as support, and once we break above 633 satoshis I think this pushes on into 850, above which there is no real resistance back into that August 2020 high above 1400 satoshis. Again, the bearish scenario here would be for the pair to lose that reclaimed support and prior range resistance at 360 satoshis. Hold above that and the cycle will begin to accelerate soon.
Price: $0.18 (346 satoshis)
Market Cap: $126.048mn
Thoughts: As regular readers will know, COTI is one of my favourite lowcaps (though now on the border between a lowcap and a midcap).
If we begin by looking at COTI/USD, the pair recently broke to new all-time highs above $0.13 (excluding the random wick into $1 that isn’t present elsewhere), with last week closing firmly above the high into resistance at $0.20 (the 1.618 extension of the bear market. I am expecting COTI to continue its parabolic advance from here, with $0.32, $0.56 and $0.73 my key areas for profit taking moving forward. I will be leaving a moonbag for whatever it can do beyond that, but I expect to sell the majority of my position above the 4.618 extension (assuming it does indeed get there).
Turning to COTI/BTC, much like FET and other similar charts, there is plenty of upside here, with COTI having just reclaimed some key resistances around 320 satoshis and now looking to retest 414 satoshis as resistance. Flip that level on the daily and the next resistance is at 532 satoshis, with the 2020 high the major resistance above that. Ultimately, however, I do believe that COTI makes new all-time highs against BTC at ~1250-1300 satoshis, which is still a good 3.5-4x from here. Incidentally, 1200 satoshis is around the 1.618 extension of the August 2020 to January 2021 bear cycle; an extension that was commonly hit in early 2017 by coins that had their test pump late in 2016, retraced to the lows and then sprang for a second leg.
Price: $0.64 (1192 satoshis)
Market Cap: $31.461mn
Thoughts: Fusion was requested by a reader, and though I don’t own any at present, the chart does look appealing.
Beginning with FSN/USD, Fusion finds itself pressing up against resistance at $0.88, having bounced at the all-time low ~$0.074 and reclaimed support at $0.28. Volume has started appearing here and if the pair could flip this resistance, the next major level is at $1.81. Looking at the daily, we can see how inefficient the price-action was in November 2019 that led to the rally into $1.81, with no real resistance stopping the pair between here and there once $0.88 gives way. The way to play this in my opinion would be to buy the daily close above the level with a stop at the swing low around $0.58, targeting that $1.81 high.
Looking now at FSN/BTC, this chart is particularly appealing, as the pair broke below the original accumulation range support at 1331 satoshis, made a new all-time low at 405 and is now attempting a reclaim of that former level. Close the weekly above it and I think – much like the rest of the market – Fusion begins its reversal back to that August 2020 high just shy of 11000 satoshis, which is a lot of upside with a clear invalidation level at the all-time low. Alternatively, if you look at the daily, another way to play this would be to buy the reclaim of the 200dMA with a stop below 1100 satoshis.
Price: $0.477 (890 satoshis)
Market Cap: $20.334mn
Thoughts: Ubiq was another request by a reader an again I do not ow any at present, but I have traded Ubiq numerous times since its inception.
Looking at UBQ/USD, the pair looks very much like other old-guard coins like Siacoin and Golem, where it has reclaimed resistance as support at $0.33 and broken above the neckline of a multi-year inverse head and shoulders, with only the 200wMA and prior support turned resistance between $0.63 and $0.75 in the way of serious acceleration. Close the weekly above that 200wMA and I don’t think $1.10 really provides any resistance at all, with $2.75 the obvious target above. Invalidation on the Dollar pair is quite clear also, with a weekly close back below $0.33 invalidating the current structure.
Turning to UBQ/BTC, this is a textbook altcoin chart, with the pair having retraced into all-time lows at 535 satoshis in September 2019 and spent the subsequent year inside a range between there and 1563 satoshis as resistance. In September, it broke above this resistance, retested prior support at 3k as resistance, failed and retraced back to the all-time low, which it has since swept and broken back above. I’d now expect that 2941 satoshi high to get taken out, with 9301 satoshis the only major resistance between here and the 200wMA. The only issue here is that there really isn’t much volume at all, so anyone who wants to be involved will have to be super patient.
Price: $0.037 (70 satoshis)
Market Cap: $3.738mn
Thoughts: WeOwn has been in a 483-day range against the Dollar, with the all-time low acting as support at $0.0058 and resistance at $0.043 (a huge range, I know, but historically-speaking not so large). This past week saw CHX/USD close above the range slightly, and I’d like to see expansion beyond this this week to confirm the breakout, where I will be adding to my position, targeting the 50% retracement of the bear cycle and prior resistance at $.16 at the very least. However, like effectively everything else in the market, I expect CHX to break new USD all-time highs this year – it just appears to be lagging most of the market thus providing an opportunity to cycle out of other movers that have hit targets.
Looking finally at CHX/BTC, the chart is self-explanatory here, with a very slow bleed into all-time lows at 25 satoshis, where the pair has only once broken above the 360dMA, back in August 2020, and only briefly. That breakout failed and the pair continued to bleed, continuing to be capped by both the 200dMA and 360dMA at 75 satoshis at present. Reclaim that cluster of resistances as support and I think this accelerates into the August high at 400 satoshis, as there is very little supply on the books. A move into 400 satoshis would take the dollar pair very much in the range of that 50% retracement, providing confluence for a good area to shave some position size.
And that concludes this week’s Market Outlook.
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