Market Outlook #157 (10th January 2022)
Hello, Happy New Year and welcome to the 157th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Cosmos, Phantasma, COTI, OVR, Exeedme and Ureeqa.
As ever, if you have any requests for next week’s Market Outlook, please do let me know.
Market Cap: $790.669bn
Thoughts: A new year begins and despite the roller-coaster ending to 2021, Bitcoin did indeed have a positive year, ‘closing’ 2021 up around 60%, which we can see on the yearly chart provided.
Now, looking at the monthly, we can see that price has been range-bound between support at $29k and resistance at $65k for effectively a year, having wicked above that resistance into the current all-time high at $69k before printing a monthly swing-failure and since selling off. 2022 opened at $46,210 and we are now trading below that level, which also happens to be right around the mid-range of 2021’s price-action. Whilst we are trading below this level, if lower timeframe structure remains bearish, I would expect price to be attracted to that cluster of lows at the $29k support, where the reaction on the monthly timeframe would be telling. Break and close below $29k and we have monthly bearish structure, which is undoubtedly a bear market and where we could expect to see the prior all-time high retested at $20k. If we do take out $29k but close the month back above it, we’d see a monthly swing-failure form similar to that which marked the top, and the range support to range resistance play would likely reign supreme, where we could look for longs into the mid-range, derisk and then reopen on a reclaim to hold towards $65k. These are longer-term scenarios that could play out over the course of 2022, not short-term positions. If the cyclical top is not yet in, I would want to see price reclaim $46.2k after forming a higher-low/SFP on the weekly timeframe (which we’ll look at next), where we could then expect at least the range resistance to be retested if not a full-blown breakout to new highs.
Turning to the weekly, we can see that price reclaimed resistance at $53k and has since sold off, breaking below that yearly open and mid-range last week and sweeping the low at prior resistance ~$42k. We now sit marginally above the higher-low at $39,600, which, if we are not to return to the bottom of the range, I would expect to be protected. As such, I am now looking for a sweep and show of strength around that low, or for that low to hold firm and price to begin printing bullish structure on the lower timeframes.
If we look at the daily, we can see that the confluence of support at the 200dMA and 360dMA has been lost and retested as resistance, whilst price remains below trendline resistance from the all-time high. We have since fell towards that higher-low and support cluster between $39.6k and $42k and there are some signs of strength but not enough to mark a bottom just yet. In fact, looking at this, I would be more interested in holding off on a long unless we get a capitulation wick through $39.6k or looking for shorts on a rally back up towards the yearly open and trendline confluence, looking for a $42k retest with a stop above the 200dMA. We could then look for signs of strength in the form of a higher low forming before a longer-term breakout and reversal. If we lose $39.6k and no buyers show up, I’d look to sell any rallies back towards $29k.
Price: $3156 (0.0753 BTC)
Market Cap: $375.882bn
Thoughts: Beginning with the weekly chart for ETH/USD, we can see that price has finally lost its long-term trendline support from March 2020, which is not the best signs for bulls as both that and weekly RSI point to failing momentum. That being said, structure is still intact insofar as ETH/USD has not broken below the $2637 higher-low. If that low fails and price closes below it, I think its game over for quite a while for the pair, as we would have a long-term trendline break, a deviation above all-time highs and subsequent breakdown and a loss of weekly bullish structure, all whilst volume on the most recent push to new highs was substantially lower than previous rallies. If we hold above $2637 however, I would be looking for short-term longs back into that double top resistance at $3950, which would be a great area to either hedge some spot exposure or look for shorts if you want to be more aggressive, assuming that any weekly close back above $3950 would open up a push for new highs. Looking at the daily, we are also now sitting just above the 360dMA, so I would not want to be selling any ETH right here given the confluence of support in this area. That said, with structure as it currently is, I’m not interested in getting long unless we see a push higher off this support and then a return to form a higher-low. No matter what happens, I will be selling some spot if we retest that yearly open.
Turning to ETH/BTC, we can see from the weekly that despite the most recent sell-off from the breakout to new highs, the pair is still within its parabolic curve and above some key prior resistance, although the dwindling volume on the most recent push higher is not so promising. From here, I would want to see this area above 0.0713 hold as support, but ideally 0.075 should hold firm as that is the most recent prior resistance and a retest of trendline resistance as support. Break back above 0.077 from here and I think the higher-low is in for the pair and we continue higher towards 0.105. Breakdown from here below 0.0713 and thus confirmation of 0.088 as a deviation above the 2021 range would be, for me, an early indicator of much more pain for crypto, as ETH has been outperforming the entire bull market and signs of slowing and/or reversal of this trend would suggest that Dollar pairs are also ready for new lows, in my opinion. If we look at the daily, we saw a fakeout above trendline resistance last week into resistance at 0.0823 and then a sell-off below the yearly open into 0.0733. The 200dMA now sits just above the mid0range and major support around 0.0692 and I would like to see that area hold as a loss of mid-range and the 200dMA for the second time within this range, as well as the parabola, would suggest to me that the 360dMA down at range support is next up. Loss of the May low, of course, spells disaster and the end of the multi-year uptrend for the pair.
Price: $1.17 (2792 satoshis)
Market Cap: $39.198bn
Thoughts: Beginning with ADA/USD on the weekly we can see that much like ETH the pair has lost its long-term trendline support and now retested it as resistance at $1.64, printing a lower-high that preceded last week’s sell off below $1.13. Despite wicking below that local low, the pair did close above it but the structure here is terrible, with the only remaining strong support at historical resistance around $0.98, which, if price trades towards, I would be interested in longs for a bounce. However, lose that level and close below it and I think the entirety of the 2021 rally will be undone, where I’d be looking to short the pair towards $0.42. Bulls want to see the lower high at $1.64 broken and closed above, turning weekly structure back to bullish – until then, this is a short all rallies scenario. Looking at the daily, we can see that the 360dMA has also been retested as resistance and had not been traded below for well over a year, since the beginning of the ADA bull run. Momentum is clearly to the downside here and I’d be wary of any longs outside of playing the $0.98 support bounce. As for shorts, if we rally off this support back into $1.55 I’d be keen to get short there with a stop above $1.94 and looking for $0.98 to get swept.
Now looking at ADA/BTC, the weekly structure is undoubtedly bearish as 3.2k satoshis was lost as support and price retested it as resistance, leading to a lower low as price traded into 2.5k satoshis. From here, we are finding some support but 3.2k is your line in the sand – break back above that and start flipping it as support once again and maybe ADA has bottomed out and we can look to play it back towards 4.2k as the first resistance, but unless that occurs I would expect price to drop lower towards the 200wMA and 2020 highs at ~1500 satoshis.
Price: $36.54 (87,270 satoshis)
Market Cap: $8.259bn
Thoughts: ATOM has been an outlier of later, having played out against the Dollar almost exactly as I had anticipated if the breakdown below trendline support was indeed a bear trap, as mentioned in a December Outlook. Since that false breakdown, price rallied hard to reclaim the trendline and break back inside range resistance at $27.85, clearing it all the way into the mid-range of the correction at $33.50. Subsequently, the pair has continued to rally higher, break above the lower highs at $35.85 and rallying into the all-time high at $47, where it found resistance for a third time. However, given the strength following the correction and return to highs here, I am keen to add to longs, expecting ATOM to break beyond that high if it can continues to hold key supports. This can be more clearly observed on the daily, where we see the breakout beyond mid-range, leading to the ATH retest and subsequent sell-off back into mid-range to test it as support. I am adding here with a stop around $25 and looking for the 200% extension to be tagged at $58.25. If this does break down from here and momentum cannot carry it higher, I would look to flip short below $25 and look for a breakdown below $20 to confirm the beginning of a bearish trend.
Turning to ATOM/BTC, we can see that the 78.6% retracement area at prior resistance ~44.5k satoshis did indeed hold as support, as the cluster of lows was swept into 43k and price then reversed hard, breaking back above the 2020 high and rallying into the 2021 highs, though ultimately closing last week closer to 83.5k satoshis. If we look at the daily, we would now want to see the 2020 highs act as support and price to push higher again, with any close above 104k satoshis opening up another 20% move higher towards 0.00128.
Price: $3.24 (7723 satoshis)
Market Cap: $336.886mn
Thoughts: If we begin by looking at the weekly chart for SOUL/USD, the pair has broken above triple-top resistance at the prior ATH of $0.77 and has since continues higher towards $3.96, which formed the all-time high a few weeks ago. Price is now range-bound between that high and support at $1.85, with plenty of volume coming in around here. If we drop into the daily, we can see that the long-term trend is clearly pointing higher and price is printing higher-lows as is pushes back towards the all-time high. If we see a daily close above that high, I would expect to see the 1.618 of the trend tagged at $6, with major resistance at the confluence of the 1000% extension of the long-term trend and the 2.618 extension of the most recent swing higher at $8.60. That is where I would look to derisk significantly if I was a spot holder of SOUL. Alternatively, if price fails to break out here and moves lower, taking out $1.85, there is very little support between there and the previous cycle high at $0.78, so I would again look to exit and secure profits in that scenario, looking to rebuy back around that 360dMA.
Turning to SOUL/BTC, the pair has just marginally closed above the prior ATH weekly close at 7969 satoshis, and I would expect to see continuation higher towards the 100% extension of the trend at 10k satoshis over the next couple of weeks. As long as the current swing-low at 3.9k satoshis holds firm, the weekly structure is bullish. Break beyond 10k and the next key resistance is the confluence at 19.5k satoshis. Not much else to add here except that SOUL is clearly an outlier at present as the rest of the market is being thrown around.
Price: $0.33 (787 satoshis)
Market Cap: $286.72mn
Thoughts: If we begin by looking at COTI/USD, the weekly continues to appear like a long-term uptrend that remains intact, with the most recent correction off the all-time highs leading to a temporary bottom forming just above trendline support at $0.25, with price having since rallied into resistance at $0.44 – where I took profits on half of my remaining position – and now come off to attempt to form a higher low above that trendline. If COTI is successful here in defending the trendline and the $0.25 low, I would expect to see continuation higher for another cycle towards all-time highs. If, however, momentum in this long-term trend begins to fail, I would expect to see a break and close below $0.25 and for the support at $0.22 to give way, leading to another 50% drop towards the historical resistance turned support between $0.10 and $0.13. If we do see this occur, I will be selling my remaining COTI on a close below $0.22 and looking to rebuy if we can begin forming a bottom around $0.10.
Turning to COTI/BTC, again the long-term trend continues to point higher as price gets squeezed upwards within a multi-year ascending triangle. If the trendline support of this triangle holds firm, as it has since the beginning of 2021, then the 572-satoshi should be the new cyclical low before the next squeeze higher towards 1300 satoshis, which is looking promising based on current market structure. The weekly has closed and held above prior resistance at 750 and daily market structure is bullish following a trendline breakout. Weekly RSI is also printing higher lows on each successive cyclical low, so there is no reason yet to expect the worst. My reasoning for selling half of my remaining COTI at $0.44 was simply to derisk in times of uncertainty and have more dry powder. The reason I have not exited all of my remaining position is because the trend is still intact and unless we see 570 satoshis lost, I think COTI continues to outperform BTC in waves.
Price: $2.30 (5492 satoshis)
Market Cap: $39.312mn
Thoughts: Looking firstly at OVR/USD, we can see that price played out a classic bear cycle into depression with a bottom in October around $0.60. Since, the pair has gone vertical, rallying all the way back to the all-time high at $3.16 and poking above it into $3.33. We are now seeing momentum fail as price has closed back below that all-time high and below resistance at $2.57, bleeding through support here at $2.30. If we start to lose below this level, I would expect the retracement to carry the pair to that key support at $1.73, below which there is only air back down towards $1.08. I do not hold any OVR but based on the failing momentum here, I’d look to secure profits and then re-enter if $3.30 is closed above, as we would then be in price discovery.
Turning to OVR/BTC, the picture is quite similar, with a swing-fail of the all-time high forming but price currently consolidating just below that previous high at 5.8k satoshis. Whilst the higher-low at 4750 holds firm, this doesn’t look as bad as the dollar pair and it may be the case that strength here that takes the pair beyond 6k satoshis will begin to pull the dollar pair up as OVR enters price discovery. However, given how tight price is to that prior high, I think R/R is favoured here for reducing exposure – you can always add exposure when price discovery is confirmed.
Price: $0.46 (1090 satoshis)
Market Cap: $29.407mn
Thoughts: Looking firstly at XED/USD, we can see that price remains below the 200dMA and long-term trendline resistance but that the pair appears to have printed a spring following the fakeout below $0.34. Since the pair has v-reversed the sell-off and is now looking at breaking back above the 200dMA. I continue to hold my long-term spot bag from lower prices but I will be looking to add if in the face of market-wide uncertainty XED can break out beyond that trendline. If we print a lower-high below it, I will be exiting on a subsequent loss of $0.34, as I would then expect the bottom of he range to be retested.
Turning to XED/BTC, the chart very much looks bottomed here as support at 650 satoshis continues to hold firm/ The 200dMA has now been reclaimed, but that alone hasn’t sparked anything previously – instead, those on the sidelines here would be better to wait for a clean breakout above resistance at 1350 to confirm a larger reversal pattern, where I would then expect to see continuation into the August 2021 high and beyond.
Price: $0.16 (378 satoshis)
Market Cap: $4.39mn
Thoughts: Beginning with URQA/USD, we can see that despite weakness over the past couple of weeks the pair is still just about hanging on to the bottom of that range and has failed to lose the all-time low. As mentioned previously, I would only look to exit my position if we close below the all-time low and fail to immediately reclaim it. As such, at present I am sitting on my hands, waiting for either a spring to form around the ATL that leads to a reversal – defined as a wick below $0.135 followed by a rally beyond the current lower highs at $0.26 – or for an exit as my idea is invalidated.
Turning to URQA/BTC, during any other market conditions I would be looking at this and saying it is a strong buy based on the flattening bottom and long-term accumulation range holding firm, as the 200dMA also flattens out following a 98% drawdown from the all-time high with no historical pump. Right now, however, we are not in market conditions for underperformers to suddenly outperform and unless you are looking to build a long-term spot bag based on a fundamental thesis, I would either await a spring to form as mentioned in the previous paragraph or wait for daily structure to turn bullish once again before entering.
And that concludes this week’s Market Outlook.
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