Market Outlook #156 (6th December 2021)
Hello, and welcome to the 156th instalment of my Market Outlook (and final Outlook of 2021)!
In this week’s post, I will be covering Bitcoin, Ethereum, Solana, Cardano, Avalanche, Cosmos, Harmony, COTI and Tornado Cash.
Market Cap: $888.462bn
Thoughts: If we begin by looking at the Monthly for BTC/USD, we can see that price confirmed a monthly swing-failure into new all-time highs at $69,000 in November, rallying beyond the prior high at $67,000 but ultimately closing at $57k, back below several key resistance areas. The breakout failed and price has since confirmed that by dumping lower, breaking back below the $53k support area and selling into $42,333, below the April low, with the pair now trading around the April low and the mid-range at $47k. There is a long way yet before December (and 2021) ends, but at present Bitcoin is on shaky ground – whilst still above some key support levels, the picture is becoming more bleak. I am looking for a monthly close above $53k here – last month’s low and prior resistance – in order to remain looking bullish into January. The bleakest scenario would be a close below $42k, where the October rally (and most expansive candle) began. If we see that, I’d expect to see a breakdown back towards range support at the May lows around $28,400, with any close below that leading to a $20k retest.
Looking at the weekly, we can see that price closed below trendline support from the summer lows and closed well below the $53k support area, dumping into that prior range high and finding support at $42.3k. This remains structurally a higher-low whilst price is above $39,600, but really we don’t want to see a close back inside $42k on the weekly timeframe, as I’d fully expect that higher-low to get taken out in that scenario. Whilst we did bounce hard off that $42k area, as we saw with the May crash and bottom, it can take several weeks after such a drastic sell-off to unwind before resuming higher. If we are to resume higher, $42k should be protected and we will likely continue to chop between there and $53k for a while. For bulls to begin looking in full control again, we’d be looking for a break back above $53k and for price to then hold it as support once more, following which I’d expect to see new all-time highs. If, however, we rally off this support into $53k and reject as reclaimed resistance, I’d be looking for shorts back towards $42k.
Dropping into the daily, there is a confluence of support in the $47k region that should really hold firm if bulls remain in control longer-term: the 200dMA, 360dMA and mid-range are all sat here, and we only briefly dropped below the 360dMA before bottoming in June-July and rallying higher. As such, if we start to close the daily below the April low at $47k, this would be a sign of major weakness, particularly given the bounce and close back above it following the sell-off; short-term, $47k is our line in the sand. Below it, I expect price to dump lower towards $42.3k and either swing-fail it before bottoming or break down below and continue this trend lower. Above it, I think we climb back towards the 38.2% fib retracement at $52.5k, which is a very good area to hedge any exposure you don’t want to be carrying. Until we get back above $53k and start to hold it as support, there is no expectation for trend continuation to new highs just yet. That sell-off was brutal and took out a lot of key support and price rarely just v-reverses out of such moves…
Price: $4053.91 (0.0833 BTC)
Market Cap: $480.094bn
Thoughts: If we begin by looking at ETH/USD, we now find ourselves sitting in a critical position, having sold off following an all-time high retest alongside BTC, dumping into $3650 where support was found at both prior resistance and the long-term trendline, and closing back above the most important level at $3950. For ETH to continue looking bullish, this area now has to hold, as we are now verging on a trendline breakdown and we have already tested the demand below and bounced from it; lose $3950 again and close the weekly below it and the trendline and I think it looks cooked. The only saving grace for ETH is that it continues to look strong against BTC, as we will come to. Dropping into the daily, the bullish and bearish scenarios are as follows: bulls absolutely need $3950 to hold here, particularly now that recent longs have been flushed and price has closed back above that level, where a bounce off the trendline back above the prior ATH at $4385 would confirm trend continuation to new all-time highs for me; bears want to see $3950 give way here and be retested from below as reclaimed resistance, where a breakdown from there would lead to a loss of $3640 and price trading all the way back to the 200dMA at $3200.
Turning to ETH/BTC, in contrast to BTC/USD, this pair just made new yearly highs and closed the weekly firmly through the prior high at 0.0826. Given that structure continues to be bullish here and we have just closed at new highs, I would expect the pair to continue to outperform, with the next level of resistance at 0.105. Despite this, there is a very high chance that even a push beyond 0.1 does not bring new ETH/USD all-time highs given the precarious position BTC/USD is in, but it is very clear that ETH looks ready to continue outperforming. Looking at the daily, price is firmly above trendline support and has just flipped resistance at 0.0826 into support, above which we are holding at present. To be honest, even if we dip back below, I think we see renewed demand on a trendline retest and continuation higher to that 0.105 area either this month or in January.
Price: $181.42 (0.00374 BTC)
Market Cap: $55.478bn
Thoughts: Beginning with SOL/USD, we can see that price has been retracing since putting in the all-time high at $266 and has now returned to retest local trendline support, having wicked below the past two weekly lows at $186 and found support, closing last week back above the level and above mid-range. Again, like for ETH/USD, this area is crucial for SOL, as holding above this $168-186 area means that bulls are still in control, and unless we now lose the level and close below the mid-range on the weekly, I think we see a higher-low form here and SOL push back towards $222, which is primary resistance at present. Dropping into the daily, if do now lose $168 following the sweep of $239, that would look like complacency to me and potentially mark the cyclical top for the pair, where I would then expect a full unwind of this range into the 200dMA and range support at $131, below which the pair has no real support back into $82. As such, holding $168 is critical.
Turning to SOL/BTC, last week saw the pair close at a marginal new all-time high weekly close at 0.003975, with price continuing to trade in a tight range between support at 0.00336 and resistance at 0.00425. This consolidation right below the all-time high as opposed to a lower high and subsequent breakdown makes me lean bullish on the pair going into the last few weeks of 2021, where any close above 0.00425 will lead to a new all-time high (which may well be the final trap before a cyclical top but that is yet to be observed). Until we break down below 0.00336 and closed below that level, I see no reason to be bearish this pair just yet, but if we do get that loss of local support I’d expect the bottom end of the range to be tagged at 0.00233, where the 200-day moving average also sits.
Price: $1.31 (2689 satoshis)
Market Cap: $43.501bn
Thoughts: Turning to ADA/USD, we can see from the weekly that the pair lost that important prior resistance turned support at $1.94 and, as expected, then proceeded to fall towards the trendline, retesting that level as resistance and then dumping back below the 2018 all-time high at $1.39, below which it is now trading. Looking at this, the pair looks completely cooked now but weekly RSI is now returning to oversold conditions, so I would not be surprised to see the pair find support around this trendline support and above $0.98, rally back into $1.90 to form a lower-high and then begin trading lower again and continue to break down below that $0.98 area. Looking at the daily, we can see that the 360dMA has also been lost and daily structure is bearish and inversely parabolic, with each dump off a lower-high becoming deeper as key support becomes resistance. Given this steepening curve of the downtrend, it is likely the most recent sell-off may have marked a short-term bottom as late shorts at the trough of this move now begin to get squeezed – as such, if we see last week’s low swept and price begin to print a bullish setup on lower timeframes, you could opt for a long back towards that $1.90 area. Alternatively, I am simply waiting for a short squeeze to fill asks and look for $0.98.
Turning to ADA/BTC, the pair lost resistance turned support at 3090, turning weekly structure bearish and reclaiming that level as resistance once again. Until that level is both reclaimed and a higher-low formed above it, ADA looks set to continue underperforming and I’d be looking for this to now trade back down towards the 200wMA and prior resistance turned support between 1500-2000 satoshis. Nothing else really to add here – I would not want to be holding this whilst structure is so poor.
Price: $81.50 (0.00168 BTC)
Market Cap: $19.89bn
Thoughts: Looking at AVAX/USD on the weekly, we can see that price continued beyond the 1.618 extension and the 200% extension as expect into $152.85, which marked the all-time high and price then sold off hard, losing almost 50% of its value over the past couple of weeks and trading back into trendline support and prior highs turned support at $83, above which the pair marginally closed last week. We also marginally closed below trendline support but do remain above key resistance turned support and the higher low on the weekly, so structure is still bullish. If we drop into the daily, however, we printed a lower high at $131 and then broke down, turning daily structure bearish. If we do catch a bounce around here, I’d look for shorts at $100 or so to hold back into that $64 prior ATH area, or potentially lower, with the next support at $51. Ultimately, weekly structure is bullish until $51 gets taken out, so if you are a holder, that’s your line in the sand for a longer-term trend reversal.
Turning to AVAX/BTC, the pair broke new all-time highs into 0.002576 and then sold off last week, closing back inside prior highs at 0.0018 but holding bullish market structure. That said, I would now expect to see a deeper unwind back towards trendline support and historical resistance turned support at 0.00115, where I would expect significant demand to come in. Dropping into the daily, we can see that the parabolic rally has been broken and price-action does very much resemble a complacency high on this timeframe, which aligns with the idea that there is still a deep retracement to be seen back towards major support, with the 200dMA as confluence just below the trendline. Until we get back around that area, I’m not too interested in being long AVAX and would rather short the bounces.
Price: $23.30 (47,970 satoshis)
Market Cap: $5.305bn
Thoughts: Beginning with ATOM/USD, the picture looks much more bleak than it did last week, as price wicked above the prior weekly high and rejected once again at the mid-range before closing below last week’s low at $24.80. The pair does still remain above the trendline for this long-term cycle, but we are now back inside the previous range following a breakout to new highs and have begun flipping important support as resistance, so I am not so sure this has another leg in it – at least not from current prices. If we now close the weekly below the trendline and last week’s low, the next major support is back at $14.60-$16.20. Below that, we would be taking out the summer lows and historical resistance turned support at $9, which would lead to a much deeper unwind if that level was lost. Looking at the daily, we are sitting right at the 200dMA and just above the 360dMA, below which we briefly traded during the previous bottom before rallying higher. That said, I would want to see this area now hold given the structure here and trendline support, in order for last weeks move to look more like a trap, but given the wick above $35 into the mid-range, sweeping the prior weekly high and then breaking down with force, that looks much more like a dead cat bounce than anything else. As such, I am leaning more towards a loss of the 200dMA and 360dMA into a breakdown below $20 and subsequent downtrend back towards $10.50.
Turning to ATOM/BTC, we can see here that the pair is consolidating primarily between support at 44k and resistance at 55k satoshis, and if we drop into the daily we can see just how choppy this range is above the 200dMA. Last week saw a strong push higher to close above 60.4k satoshis but an immediate sell off back towards the 200dMA; technically, daily market structure is now bullish given the marginal higher-high, but given the velocity of the retracement back to the origin of the move, I would consider it a false break. As such, bulls need to see 44k defended here and a cleaner, more sustained break beyond 61k satoshis to follow to confirm a reversal off 200dMA support. If instead we lose this area, I would expect continuation lower towards 39.1k satoshis, where if that level fails we see range support retested at 30.7k.
Price: $0.165 (341 satoshis)
Market Cap: $1.901bn
Thoughts: Beginning with ONE/USD, we can see from the weekly that price has lost trendline support following a lower high at $0.33 and subsequent sell-off last week, where price closed below the trendline and below prior all-time highs at $0.235, dumping all the way back into that previous mid-range at $0.14 and bouncing there. Structure is now bearish and I would expect any rally back into $0.24 to be sold hard, which is where I would also look to fill asks with invalidation at $0.33 and a target of $0.12. Dripping into the daily, we can see that price is sitting on the 200dMA, and it was the range between there and the 360dMA that marked the previous bottom. As such, if we do not bounce here into my asks at $0.24, I’d be looking to buy $0.10 for a bounce into that area with invalidation below $0.095. Level to level here – only expectation is that we see $0.24 tagged once more regardless of what happens subsequently.
Turning to ONE/BTC, we see a similar pattern here with a weekly structure reversal to bearish following a lower high and weekly close below 390 satoshis. Given this structure, again I think rallies are for selling with invalidation on a reclaim of the mid-range and historical resistance at 390 with price then forming a higher-low above it on the lower timeframes. Dropping into the daily, we can see that there is 200dMA support as well as prior resistance between 280-310, which is not an area to look for short positions given how price has acted here in the past – in fact, a wick below the 200dMA into 280 would align nicely with the level-to-level long on the dollar pair from $0.10 back into $0.24. If we do lose 280, I think the pair is cooked and we see a support retest down at 141.
Price: $0.33 (679 satoshis)
Market Cap: $287.14mn
Thoughts: Beginning with COTI/USD, we can see that price sold off following the lose of resistance turned support at $0.50, reclaiming that level as resistance and then dumping last week all the way below support at $0.31. Price eventually closed above $0.31 but is now retesting that area as reclaimed support, with weekly structure now bearish following the breakdown but price still within a long-term uptrend and above a key weekly swing-low at $0.23. Whilst this does not look as bearish as other dollar pairs (and whilst the BTC pair is sitting at key support) I would not rush to exit here, if you did not take profits above $0.50. Instead, I’d expect to see price bounce off the confluence of support here back towards $0.44 as a weekly level and potential lower high, which would be the area to derisk. That is where I will look to cut a further 25% of my remaining position, holding some COTI for a potential macro higher-low within the uptrend and continuation higher. Looking at the daily, we are sitting on 360dMA and 200dMA support here but daily structure is certainly bearish following the pump into reclaimed resistance and subsequent breakdown – for long-term bulls, the level to reclaim now is $0.50; break and close above that and I think we see $1 traded in 2022. For those looking for areas to get long if you are sidelined, either play the momentum trade on a reclaim of $0.50, or wait for a deeper retrace following a lower high back towards the previous bottom around $0.135, which would be a value area to get involved at.
Turning to COTI/BTC, the pair remains capped by trendline resistance from the all-time high but above trendline support from the yearly low, with price having wicked into that trendline last week following a breakdown of market structure on the close below mid-range at 760. This would be exactly where we want to see a higher-low form if the trend is to continue higher, where we would be looking for a trendline breakout on the weekly followed by a higher high on the daily above 900 satoshis to reverse back to bullish market structure. If, however, that hold as a lower high, I would expect to see price wick back below the 360dMA at 572 and begin a bottoming formation closer to 450 satoshis, by which point I will have exited my full position anyway (as long as we don’t just turbo nuke from here down to 450 with no bounces, lol). Ultimately, above 308, the pair is technically still in a macro uptrend but that’s too deep a retracement to wait for, so I would not look to play it that way, particularly if you are not a longer-term holder from significantly lower prices.
Price: $33.65 (68,910 satoshis)
Market Cap: $36.851mn
Thoughts: As this was a request by a subscriber, I’d like to preface this by saying that I have no fundamental opinion on TORN as I have not done enough FA on it to form one. However, as charts go, if this is a fundamentally-sound project, we may be hitting bear market troughs for it.
If you look at TORN/USD, we can see that price had a brief rally on inception from support at $200 into an all-time high at $437 but has since been in a perpetual downtrend all year, eventually forming an all-time low at $26 in July and spending all of May to the present day largely range-bound between $30 and resistance at $77. The 200dMA is also capping price and we are now pushing lower, back towards the all-time low. The pair has already retraced 94% from its all-time high, though no doubt it can go significantly lower. However, if you are bullish on the project, then one could anticipate this range being an accumulation range and buy as close the all-time low at $26 as possible, even buying a sweep of that level if it comes, and dollar cost average in as long as that range support is then held. That would be the ideal formation of a cyclical bottom, particularly if large holders are also buying. If, however, $26 is lost and retested as resistance and price moves lower from there, get the fuck out, as you’d be looking at bearish price discovery to an unknown bottom, particularly in these market conditions.
And that concludes this week’s Market Outlook and the final Outlook of 2021. I am just finishing up research for the final post of the year, which will – with some luck – be out tomorrow. Following that, the next post will be in the first week of January. I will see you in 2022!
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