Market Outlook #120 (12th April 2021)
Hello, and welcome to the 120th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Litecoin, Chainlink, THORChain, Siacoin, Power Ledger and Auction. I will also be providing updated analysis on Altcoin Market Cap.
As ever, if you have any suggestions for the next post, feel free to leave them in the comments below.
Market Cap: $1.144bn
Thoughts: Coming into the Coinbase IPO on April 14th, Bitcoin is looking coiled and ready for a breakout.
Beginning with the weekly chart, volume remains declining with last week trading the lowest volume on Coinbase thus far in 2021, but price did squeeze a little higher after a week of tight consolidation, closing near weekly highs at $60k. We did see Bitcoin run above $61k briefly last week, but for now the all-time high at $61,800 remains firm. Trendline support is still intact but we are on the cusp of a direction being picked if this trendline is to remain relevant – within a couple of weeks I would imagine we see a breakout to the upside or a breakdown. Naturally, given the current market structure I am heavily leaning towards an upside breakout, whereby we may well see some sort of late long liquidation even occur subsequently but the trend will resume higher, with $64k as a first target, followed by $70k. If trendline support does remain intact, we are still on track for $87k by July. Should bears gain control and the weekly close below the trendline *after* sweeping the all-time high, that would look rather bearish and I would be looking for the $50k swing low to hold for weekly market structure to remain bullish; close below that and I would be selling the bulk of my spot BTC.
Turning to the daily, we can see somewhat of an ascending triangle forming from the March lows, rising into that all-time high at $61,800. Given the obviousness of this setup, it would not surprise me to see BTC break higher, close firmly at new highs and then rinse all of the longs back into $55k or so before resuming the uptrend. Moreover, that $55.3k swing-low that formed last week is now critical for daily market structure to remain bullish, so if we do see a flush, I would like to see that hold. As you can clearly see by the dwindling volume, we are very much on the cusp of an increase in volatility, and though we could conceivably see another week to ten days of consolidation within the triangle, I expect that the Coinbase IPO in two days may provide that volatility injection. Whilst the pair holds above last week’s low, however, I see no reason to expect downside from here; if we do start trading lower from here without taking out the all-time high, what I would like to see is price sweep $55.3k and close back above, thus providing fuel via liquidity for the next leg higher.
Price: $2180 (0.03587 BTC)
Market Cap: $258.015bn
Thoughts: Ethereum squeezed a little higher last week after closing at all-time highs against the Dollar the preceding week, but ETH/BTC remains in consolidation.
If we begin with ETH/USD, we can see from the weekly that last week saw the pair retest minor resistance as support at $1923, before rallying higher into $2196 and closing at highs around $2130. Since, the pair has rallied a little higher, taking out last week’s high into $2200 before coming off a little, but the market structure is quite clearly pointing higher from here, with the 1.618 extension of the bear market ahead at $2240, followed by the 200% extension at $2750, which aligns quite closely with the 200% extension of the recent range. As such, I am expecting the pair to continue marching higher into that $2750-2800 before we see any meaningful correction. Beyond that, should we see the rally sustained going into June/July, I am looking at the 2.618 extension of the bear market at $3575, which aligns with the 300% extension of the recent range. Dropping into the daily, we can see similar market structure to that of BTC/USD, except with ETH now leading as opposed to BTC following its all-time high break. Since the high was broken, we can see the pair has been consolidating around it, with $2200 acting as resistance at present. If the pair can hold above $1923 (last week’s low at prior resistance turned support) I am confident we will see higher prices over the next week.
Turning to ETH/BTC, as expected following the expansive week that broke above 0.035, the pair spent all of last week consolidating. From here, I would like to see the pair test 0.0375 this week, although with the possibility of a breakout into price discovery for BTC/USD, even holding above 0.035 would be a sign of ETH’s strength. Looking ahead, I am still very much expecting a rally towards the 2021 high at 0.0462 and beyond. If we turn to the daily, it appears as though a bull-flag is forming here above 0.035, but volatility in BTC/USD could render this invalid rather swiftly. Nonetheless, looking at price as it is, I would expect to see the pair climb towards 0.0375 soon, with a daily close above that level opening up further upside into the 2020 high at 0.0406, where the next area of resistance resides. Should we see ETH/BTC lose 0.035, I would be looking for a higher low to form above the 200-day moving average. No reason to be bearish for me unless the pair retraces this entire rally back into 0.03.
Price: $1.38 (2233 satoshis)
Market Cap: $62.343bn
Thoughts: XRP has finally broken out and done so in quite some fashion.
If we look at XRP/USD, we can see from the weekly that the pair rallied above the triple-top at $0.78, straight through minor resistance at $0.96 all the way into the 38.2% retracement of the entire bear market at $1.35, where it closed the week and around which it is currently consolidating. All of this occurred on the highest volume in around eight weeks, with the strong weekly close opening up the likelihood of continuation towards the 50% retracement at the very least around $1.73 later this week. Above that, the final resistance before new dollar all-time highs is the ATH weekly close at $2.79, with $3.38 above it. In market conditions such as these, whereby other large-caps have been breaking new USD all-time highs for some time now, I see no reason why XRP won’t do the same before beginning its customary sharp reversal. If we do see XRP break above $3.38, that would give us a strong indication as to the stage of the market cycle that we are in (if we do not have such an indication already), so that would line up with my desire to be largely out of altcoin positions within the next 6 weeks or so. Looking at the daily, we can see that the impulse out of the range was strong, with XRP rallying all the way into the $0.97 area on the day of the breakout. The strength here quite clearly suggests that XRP has more gas in the tank, so for those looking for potential entries, a retest of the $1.13 area as support would be ideal, in my opinion.
Turning to XRP/BTC, as mentioned many weeks ago, the resistance cluster around 1800 satoshis was the only area we really needed to be watching, as we had confluence from trendline resistance, prior support, the 200dMA and 360dMA. If we look at the weekly, the pair closed firmly above that trendline resistance last week after its first false breakout late last year. If XRP retests that 1900-satoshi prior support this week, I will be looking to long with a target of 4k satoshis, the area of historical support turned resistance that capped the pair in December 2020. Dropping into the daily, despite the 360dMA and trendline resistance capping the pair last week briefly, a few days of consolidation led to a strong breakout, unlike in February when this area was tested and rejected hard. As such, I expect we will see continuation in April firstly into that 2800-satoshi area, followed by 4k. This bullish market structure would only be invalidated for me if we closed back below trendline resistance and the 360dMA.
Price: $253 (0.00419 BTC)
Market Cap: $16.628bn
Thoughts: If we firstly look at LTC/USD, from the weekly we can see that it continues to rally along its parabolic curve, with the current steepness of rally indicating a new all-time high above $420 within a few weeks. Last week saw the pair break above recent range resistance at $252, closing a little above it on decent volume, just shy of the 61.8% retracement area at $273. From here, I would be looking for trend continuation into the 78.6% retracement level and highest weekly close around $330, which I expect to be the final resistance area prior to new all-time highs. Turning to the daily, market structure is very clean here, with the breakout a couple of days ago closing above a cluster of highs around $250, with price holding above the level at present and RSI having made a higher-high, indicating momentum is returning. I would like to see the pair now hold above this $250 area, but if we do drop off, that support area around $220 is critical to hold. Looking above, I expect the pair to continue towards $273 over the next week or so, with $327 the main area of interest above that. Lastly, RSI – despite making a higher-high – remains well below extremely overbought conditions such as those of earlier in the year.
Now, looking at LTC/BTC, this chart is a mess because of all the chop as the pair bled lower, but there is one clear trendline resistance I would like to see broken before really believing in further upside. Last week did provide significant expansion off the lows, but whilst trendline resistance caps price, for all we know this could simply be a lower high below prior support at 0.00442. If we see continuation from here above the trendline, a weekly close above 0.00492 would turn market structure bullish, with a flip of 0.0055 opening up another 22% of potential rallying into the historical support turned resistance at 0.00685. Looking at the daily, the 360dMA has capped price for over a year, so if we flip that on decent volume, it may be the early indicator that we are finally seeing a long-awaited trend reversal. If the pair fails here and prints a macro lower-high, we can expect 0.00389 to be retested, with the possibility of a higher low forming there.
Thoughts: It feels like LINK has been consolidating forever now, but we may well be on the cusp of the next leg higher for its Dollar pair.
If we begin with LINK/USD, the pair has been capped by its all-time high a $37.50 for several weeks now, with the previous all-time high at $21 acting as range support. Before anyone gets too excited, I would like to see the weekly close firmly above $37.50 on higher volume than is currently being traded to confirm the next leg is beginning, with targets at $49 and $62 above. Looking at the daily, primary resistance has been found at $34.70 within this range, so a daily close above that would likely lead to that all-time high being taken out, and with the pair having swept the double-bottom at $25 before beginning its recent rally, we may now have the necessary fuel to do so. If, however, we see rejection at the highs, I’d want to see $25 hold as support on a retest, as a move below would lead to $21 being retested again as range support and potentially marking the macro top for LINK should it fail to hold.
Turning to LINK/BTC, we can see that a higher-low has formed on the weekly at 45k satoshis, following the sell-off late last year into 37.5k, but I would now like to see the weekly close above 60.5k satoshis to open up the likelihood of continuation into the yearly high at 80k satoshis, where I would expect significant resistance to be found on the first test. From the daily, we can more clearly see the current structure, where bullish divergences had formed as price bled throughout March, and the dump into 45.4k satoshis at the end of March marking a bottom. Since, the pair has rallied higher, turning market structure bullish once more on the daily timeframe as we formed a higher high above 57.1k satoshis, but the pair remains capped by trendline resistance. A breakout above this trendline would confirm the reversal for me, with a flip of 60.5k satoshis as support likely leading to that continuation into 79.8k satoshis.
Price: $10.70 (17.900 satoshis)
Market Cap: $2.492bn
Thoughts: Looking firstly at RUNE/USD, we can see from the daily that RUNE has been in a long-term uptrend since November 2020, rallying and consolidating within several ranges during that time and most recently breaking out above range resistance at $6.70 at the beginning of April. Since, it has rallied to new all-time highs at $13.08, and has dipped back inside last week’s range today, having formed a swing-low at $8.85 that is now key support for daily market structure. Bulls want to see this low hold for continuation higher, as a close below that level would turn market structure bearish after printing bearish divergence on the most recent high, indicating downside – potentially back into the prior range resistance at $6.70. Should this swing-low hold, however, we could expect to see continuation into $15.45, followed by $19.56, which aligns with the $20 psychological figure. Longer-term, it is clear that RUNE is in an uptrend and whilst trendline support from November continues to be respected I would anticipate continuation higher over the coming weeks.
Turning to RUNE/BTC, price-action is quite similar of late, with the most recent push into an all-time high at 22.1k satoshis (just shy of the 1.618 extension of the trend at 22.4k) printing bearish divergence. That said, if the pair can hold above the swing-low at 15.6k satoshis, I would expect to see another leg higher into the 200% extension at 26k satoshis; if, however, last week’s low fails to hold, there is no real support all the way back into the February high at 12.8k satoshis, which may well become an area for a macro higher-low to form and a new range like that of February into April before a third leg higher
Price: $0.0265 (44 satoshis)
Market Cap: $1.26bn
Thoughts: Siacoin hit our first target last week but has since come off a little, printing a weak weekly close on both its pairs.
If we look at SC/USD, we can see from the weekly that the pair pushed into a new yearly high at $0.0385 before closing the week below resistance at $0.03, suggesting that bears might be in control here for a short while, as the pair potentially consolidates again. That said, trendline support that has held throughout 2021 is still intact and until we see a weekly close below it I think it is more likely that we push on higher than consolidate again. No doubt, we will have our answer by next week, given the steepness of the trendline and its proximity to price. If we do break down here, I’d expect to see price potentially come back to retest $0.018 as support, re-accumulate above that area and then continue towards $0.046. Dropping into the daily, we can see this trendline support more clearly, with price recently having printed bearish divergence. As mentioned, as long as $0.018 holds as support, I do not think the macro top is in, particularly when we also look at Siacoin’s BTC pair.
Looking at SC/BTC, price rejected after piercing prior support turned resistance at 61 satoshis, closing back around the 2020 high but above the breakout area at 45 satoshis. From here, given the bearishness of the weekly close, we might see the pair retrace into the area of resistance turned support below at 36 satoshis, which I would want to see hold. Once RSI has reset a little and the pair has consolidated, I still expect another leg higher into that 90-100 satoshi area, with 125 satoshis being my final target, should it come. Looking at the daily, the key support is clearly at that 36-satoshi swing-low, so as long as that holds firm I think we are simply consolidating before trend continuation; lose that and I will likely exit my position and look to get back in if it is reclaimed.
Price: $0.53 (890 satoshis)
Market Cap: $234.905mn
Thoughts: Unlike many midcaps, Power Ledger appears to be a little behind in its market cycle, looking closer to belief than euphoria against the Dollar.
Beginning with POWR/USD, last week saw the pair rally into the April 2018 complacency high at $0.68, where it found resistance, with POWR now consolidating above the 23.6% retracement of the bear market at $0.51. We could see further consolidation here, as POWR has been rallying now for several weeks without much of a break, but looking ahead I expect to see continuation into the 50% retracement and prior resistance level at around $1, which would be a good level for those in positions to begin taking some profits. If $1 is able to be flipped as support there is no real resistance between there and the all-time high weekly close at $1.78, which is then within spitting distance of the actual ATH at $2.08; another important area for position management should it get there. Looking at the daily, we can see that the rally has been supported by a trendline since February, so any break and close below that (and thus a move below $0.45) would be bearish, opening up downside back into prior resistance turned support at $0.33 at the very least.
Looking at POWR/BTC, we can see how little it has really moved relative to the rest of the market, with it remaining below resistance that has capped it since mid-2019 at 1260 satoshis, having gradually climbed off the all-time low at the beginning of the year around 265 satoshis. Flipping this level on the weekly would be the indicator that further upside and a significant trend reversal is likely on, with 1850 satoshis the next resistance above and 3530 satoshis the first fib retracement level of the bear market (aligning with prior support). Plenty of upside here if this important overhead resistance can be reclaimed as support.
Price: $59.78 (99,650 satoshis)
Market Cap: $124.571mn
Thoughts: Bounce Token was requested by a reader and, for the sake of transparency, I had never heard of it prior to today.
That said, looking at AUCTION/USD, we can quite clearly see that it is in an uptrend, having broken out of an old range in March, with resistance at $29 being flipped as support and price rallying into $40, where another range formed. The pair dumped back into $29, which became range support, and it has since broken out once more into price discovery, beginning a parabolic ascent, as I have highlighted. Over the past few days, the pair has rallied into (and above) the 200% extension of the current trend at $65.88, printing an all-time high at $70.60. If this parabolic rally holds, we could expect to see $76.50 tagged over the next few days. If the low at $54.75 breaks, however, I’d expect to see another range form before potential continuation.
Looking at AUCTION/BTC, price action is near-identical due to the limited price-history available, with yesterday’s low at 91.4k satoshis potentially forming a swing-low should today hold above it. In that case, I would want to see the low hold as support, else the pair would likely be looking at retesting the breakout area at 73.5k satoshis. If it does hold as support, the 2.618 extension is overhead at 131k satoshis, which will likely provide some resistance. Longer-term, the trend is clearly pointing higher and until that prior range support at 55k satoshis gives way, there is no reason to be bearish moving forward.
Altcoin Market Cap:
Market Cap: $957.45bn (15.82mn BTC)
Thoughts: If we begin with the ALT/USD chart, we can clearly see the parabolic advance since March 2020, with the altcoin market breaking new all-time highs and retesting $550bn before continuing higher over recent weeks. I had marked out the 1.618 extension at $880bn for a long time as an area I expect altcoins to hit this cycle at the very least. We have since closed firmly through the area, with the altcoin market trading at new all-time highs above $950bn this week. At the current rate, we might expect to see a $1.4trn market valuation (the 2.618 extension by July, which is where I would absolutely look at taking a lot of returns off the table. Volume is increasing once again, and I think we are entering the latter stages of the market cycle now, where any weekly close below the current trendline would be my signal to exit and re-assess a few weeks later; if the market loses significant value following a trendline break, we might well have topped, but if we just form a consolidation range, I would look for new positions.
Turning to ALT/BTC, last week’s close above the 200wMA was the first since it was lost back in 2019, with the first test of the MA back in August 2020 leading to rejection and a full retrace. This weekly close gives me confidence that we will see some further altcoin outperformance for the next few weeks at least, but if we close back below the 200wMA and the prior high at 14.48mn BTC, I’d be concerned. This breakout should provide the catalyst for ETH/BTC to push on for new yearly highs, so I’ll be watching ETH for early signs as to whether altcoins en masse are going to have another wave of outperformance against BTC or whether this breakout will be a failure.
And that concludes this week’s Market Outlook.
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