Market Outlook #164 (3rd March 2022)
Hello, and welcome to the 164th instalment of my Market Outlook.
In this mid-week post, I will be covering Bitcoin, Ethereum, Terra, Cardano, Fantom, Chromia, Pirate Chain, KardiaChain and Verasity.
As ever, if you have any requests for Monday’s Outlook, do let me know.
Bitcoin:
Monthly:
Weekly:
Daily:
Price: $43,194
Market Cap: $819.530bn
Thoughts: If we begin by looking at BTC/USD on the monthly, we can see that February closed green but also as an inside month – the entire February range was traded within the January range. This is is common with consolidations and the lower volume traded last month confirms this. Now, with that in mind, there is the possibility that we see failure occur at either extreme of the range this month; that is, if price breaks above the February high and rejects, ultimately closing March back below it, we can expect the February low to be targeted next, and vice-versa. Naturally, if we see acceptance above either end of the range, this scenario is invalidated and it is more probable that we continue in the direction of the breakout. As such, I am watching for either the formation of inside month failure (and thus another rejection at the yearly open) or for a March close above ~$46k to have a clearer view on expected price-action for the beginning of Q2. Close above the yearly open and I think there is a strong possibility we push all the way back towards the monthly resistance at $58.8k, which is effectively the top of the range excluding the deviations into the all-time high that were swiftly rejected. I would be looking to play April long in that scenario between $47-58k, hedging any long exposure up near that resistance, and only re-opening long exposure on a monthly close above the all-time high at $69k – I am happy to forego the range in between $59-69k as I think that is where a lot of positions will get chopped up trying to short a potential top or FOMO long a breakout for price discovery. The bearish scenario would be to deviate above $46k this month and close back below it, where I would then look to primarily play shorts in April back towards $33k.
Turning to the weekly, we can see that a higher low did from above $33k, with price bouncing at ~$34.1k and continuing higher thus far this week back into resistance at the yearly open and back above reclaimed resistance ~$42.1k. Despite the low volume, the market structure is beginning to shift here, as is momentum, but I would want to see a weekly close above that $42k are for this to remain looking strong for a sweep of $46.2k. If we start to break down again here below the yearly open and once again retest $42k from below as resistance, I think this week’s rally gets retraced and we see price begin to consolidate again near that $36-39k zone that has been supporting the pair recently. If we can close above $42k, however, I think next week sees that yearly open ran, and the reaction there will be key for subsequent price-action: sweep it into the mid-range at $46.9k and then reject and break back below the yearly open and I will be very keen to look for short opportunities; clean break and acceptance above the yearly open and I think we see price continue towards the next key resistance cluster around $52k, so I would look for longs within that range.
Turning to the daily, I have marked these two possible scenarios out for clarity. We can effectively consider the price-action since the capitulation into $33k to be a range, with the yearly open acting as that range resistance, providing confluence to its importance for me. Other than that, there isn’t much to add except that a break down back below $42k would provide a very clean short opportunity back into the breakout zone at $39.7k for me, so I am paying close attention for a possible setup should that level be lost over the next few days.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $2888 (0.06683 BTC)
Market Cap: $346.083bn
Thoughts: Beginning with ETH/USD, we can see that much like BTC a higher-low formed last week and price has rallied in response, back into the mid-range and trendline resistance, where it is currently consolidating. If we see momentum continue here and push the pair beyond $3000, closing the week above that high, market structure will turn bullish and this coupled with the mid-range reclaim and trendline breakout would look a lot more bullish to me than the pair does at present. For now, we remain capped by a cluster of overhead resistance and if we see weakness step in here and push price back below $2848, I would look for lower timeframe breakdowns to get short back towards $2425. As mentioned in previous weeks, if that $2425 level gives way, I think we see $1730 swept. Turning to the daily, the pair did break out above the trendline again on the daily but this means very little when you look at the previous two breakout attempts, with new local trendline resistance having formed on this timeframe and price having rejected at the 360dMA. That is why I would prefer to wait for weekly structure to give the signal for more relief than look for any longs here.
Turning to ETH/BTC, this pair continues to look weak, which is an important contrast to previous periods in which BTC was rallying over recent times, where ETH would lead it higher. Now, the pair is suffering as BTC rallies, and we can see that price is pushing back below the mid-range having rejected once again at the cluster of overhead resistance. I would now expect to see a further push lower towards 0.0594 before we see any meaningful bounce. Looking at the daily, price is currently sitting on the 360dMA, which is really the last line of defence before we see that push lower into the October 2021 lows; if it can hold and price catches a bid, the scenario doesn’t change until the 0.073 area gets cleared, in my opinion. If it doesn’t hold, bottom of the range here we come.
Terra:
LUNA/USD
Weekly:
Daily:
LUNA/BTC
Weekly:
Daily:
Price: $93.27 (0.002156 BTC)
Market Cap: $34.778bn
Thoughts: If we begin by looking at LUNA/USD, we can see from the weekly that price is now pushing up towards the all-time high at $105, having rallied off prior resistance turned support around $46 a few weeks ago. As the pair approaches $105, I am waiting to see the reaction upon breach of that level: a wick through the high and subsequent rejection would begin to look like a false breakout and potential catalyst for a move back towards the $50 area, but if LUNA can close the weekly through $105, the 1000% extension of the previous Q2 2021 correction would be up near $200. If we drop into the daily, I have marked out where resistance may come up prior to that huge extension figure, with the 1.618 extension of the current correction at $141.80 likely to be the first stopping point should price find acceptance above the all-time high. If we do see a sweep and breakdown, however, I want to look for shorts back into the mid-range at $71 as a first target.
Turning to LUNA/BTC, unlike the Dollar pair we are already breaching the all-time high as of this week, having taken out that top of the range at 0.0021 and extending into 0.00219. Given this breakout, the weekly close is very important here, particularly given that there is a chance that both RSI and AO will show declining momentum into new highs (too early to say yet, of course). If we do close beyond the high, I think we see continuation into the 1.618 extension at 0.0027, but I am now patiently awaiting the formation of a longer-term top: for me, this would look something like a push higher towards that fib extension coupled with bearish divergence on the weekly on both RSI and the AO, followed by a break down back below the 0.0021 level. If we see something like that, I think another large correction will follow.
Cardano:
ADA/USD
Weekly:
Daily:
ADA/BTC
Weekly:
Daily:
Price: $0.913 (2111 satoshis)
Market Cap: $30.625bn
Thoughts: ADA appears to be following the expected trajectory across both its pairs for now, and if we look firstly at the weekly for ADA/USD, we can see that price marginally closed below the support cluster at $0.90 and is now reclaiming resistance at $0.98. If this now holds as a breakdown and reclaimed resistance, I would expect to see the $0.76 low taken out over the next couple of weeks, leading to a full retrace of the early 2021 rally back towards the 200wMA and prior resistance. Looking at the daily, I have left in the trajectory marked out a couple of weeks ago, having compounded my short on the breakdown below $1.13. I have covered some around $0.90 and will look to re-open at full size should we close the daily below $0.80, looking for that $0.42-$0.50 zone to get tagged. If price breaks back above $1.13, however, I will exit the rest of my short position in profit and look to play it long back towards $1.39, as structure will have shifted and the range low breakout will look like a deviation, so I would expect relief at least back into that major resistance level.
Turning to ADA/BTC, we can see that price is approaching prior resistance ~1975 satoshis and I would expect some demand to step in here, but the 200wMA and 2020 high ~1600 satoshis is the level I am most focused on and where I would expect a short-term bottom to form if one is going to. Lose that level on the weekly timeframe and there is really very little support left until we get back below 1000 satoshis, so that 1500-1600 area is paramount for ADA bulls. If we start to see consolidation above that 200wMA and the Dollar pair begins to turn daily structure bullish, it might be time to switch bias, but for now, selling rallies.
Fantom:
FTM/USD
Weekly:
Daily:
FTM/BTC
Weekly:
Daily:
Price: $1.91 (4423 satoshis)
Market Cap: $4.834bn
Thoughts: Beginning with FTM/USD, on the weekly we can see that price found support above range lows and failed to close below $1.48 last week, with price rallying higher thus far this week all the way into prior resistance at $1.96. Despite that, the picture looks fairly bleak with bearish divergence on the weekly on both RSI and the AO. I would be looking for a bigger squeeze into the mid-range at ~$2.40 to fill some asks for another leg down into the $1.14 area, where any weekly close back below $0.91 (prior range resistance turned support) would look like a cyclical top to me and I would expect the support zone of that previous range to be retested around $0.30. If, however, we deviate below the $0.91-$1.14 pivot zone and reclaim that range support, I would be looking to switch bias and put up bids looking for the top of the range to be retested. Dropping into the daily, we are pushing into the 200dMA from below as well as prior resistance here, so if the lower timeframes begin to break down, I would not expect that extra squeeze into the mid-range to follow and would instead to look to fill asks below yesterday’s low, looking for $1.31 as a first target, followed by $1.14.
Turning to FTM/BTC, price is currently consolidating at prior resistance ~4200 satoshis , but trendline support from the beginning of 2021 has now been lost. Interestingly, unlike the BTC pair, bearish divergence only formed on RSI and not the AO for the weekly timeframe, so there may yet be some underlying strength here and that deviation scenario on the dollar pair ~$0.91 might come into play if the BTC pair continues to show relative strength. Looking at the price-action, though, we can see that minor resistance at 4720 is capping the pair and if we lose last week’s low, there is now support all the way back down to 2600 satoshis, so this area is pretty key for anyone still long-biased – I still reckon shorts are favourable back towards that area on both pairs.
Chromia:
CHR/USD
Weekly:
Daily:
CHR/BTC
Weekly:
Daily:
Price: $0.41 (953 satoshis)
Market Cap: $234.447mn
Thoughts: Looking firstly at CHR/USD, we can see from the weekly that market structure is bearish and last week saw another push lower towards reclaimed support at $0.27, with the pair wicking into $0.31 but holding above for now. This week’s rally has been much weaker than other altcoins discussed thus far, and if we see a push higher into $0.51 from here, I would look at that as an opportunity to exit spot if I held any at present, expecting another push lower into $0.27 to follow. If $0.27 gives way, I think we see $0.127 retested as a key historical level, and to be honest I would be uninterested in getting involved on the bid side unless we see those levels traded again. Looking at the daily, we are retesting the 360dMA as resistance, which acted as double bottom support on the previous correction, providing confluence to the bearish bias here. Break cleanly back above it and find momentum to break out beyond the trendline and reclaimed resistance at $0.51 and then we might have a case for ‘bottom is in’, but for now this just looks ready for new local lows. As I said, for a long-term spot position, I would be uninterested unless that $0.127 area is retested, which is a long way away yet.
Turning to CHR/BTC, price is in no man’s land at present as it closed last week below the higher-low at 1064 satoshis, confirming a structure break. The next level of support is another 20-25% lower between 750-790 satoshis, which is an area I would expect to provide some demand. If it doesn’t, however, we may get the capitulation scenario for that $0.127 level on the dollar pair, with the next major support on the BTC pair down near 460 satoshis (the pre-Covid high). That would be the area you would want a range to begin forming in order to get involved, with invalidation on a close below 340, as losing that level would leave no support all the way back to 180 satoshis.
Pirate Chain:
ARRR/USD
Weekly:
Daily:
ARRR/BTC
Weekly:
Daily:
Price: $1.17 (2707 satoshis)
Market Cap: $222.926mn
Thoughts: Unlike a lot of projects at present, Pirate Chain is beginning to approach levels that would look attractive for long-term entries if we see the right behaviour occurring. If we look at ARRR/USD, on the weekly we can see that price has been in a bear market since that April 2021 high at $16.75 marked the cyclical top, with the pair moving as low as $0.63 a few weeks ago, just shy of prior resistance at $0.567. Since, the pair has rallied higher towards trendline resistance and prior support turned resistance but fallen off just shy of it. There are two scenarios that would look bullish to me here without having to move a fair bit lower: the first would be to come back into $0.77 and establish that as a higher low, where we could look to enter with invalidation below $0.62; the second would be to front-run that area, in which case I don’t get involved until we break above and reclaim $1.80 as support. If neither of those scenarios plays out and bears remain in control, I would expect to be stopped on my $0.77 entry and price to lose $0.63, then falling back towards the origin of the all-time high rally and the previous all-time high turned support at $0.29, which would be where I look to scale in if we begin to form a range in that zone, much like the 2019-2020 range. We are already looking at a 96.3% drawdown from all-time high to that $0.63 level, so $0.29 might be asking for a bit much, but if the rest of the market enters another period of serious drawdown, we may get that golden opportunity, and I would love to get involved around there if the right price-action appears, as I think Pirate Chain has legs for another cycle.
Turning to ARRR/BTC, we are already forming something of a range between reclaimed resistance at 3300 satoshis and support above the historical accumulation range at 1550 satoshis. Continue to hold this range for many more weeks and this will look like the depression period of a classic cycle. Lose 1550 and I would expect the previous range to become the accumulation range again, where I might look to DCA in within that range with a fixed-risk, moon-or-die approach.
KardiaChain:
KAI/USD
Weekly:
Daily:
KAI/BTC
Weekly:
Daily:
Price: $0.033 (75 satoshis)
Market Cap: $108.836mn
Thoughts: KardiaChain is another like Pirate Chain that is approaching interesting price levels and that I would want to be a holder of for the next cycle. If we look at KAI/USD, we can see that price has been in a range between $0.16 as range resistance (double top at all-time highs) and $0.035 as rage support for most of its history, but price broke down below that range support a few days ago, closing the weekly through it on higher volume than of late. If this a fake-out, I would want to see demand step in a reclaim $0.035 as support next week, with a subsequent range formation above that reclaimed support acting as my trigger for entry. If, however, this breakdown is legitimate, we have a long way down to the next major support at $0.011 – the November 2020 low. Looking at the daily, a breakout beyond trendline resistance here and reclaim of $0.035 would definitely look like another cyclical bottom to me, but continuation lower from here and I would be looking to scale into long-term positions between $0.011-$0.014, which is another 60-70% lower. This is make or break for the pair at present.
If we look at the BTC pair, we are again returning to the levels that have preceded previous bull cycles, with support around 56 satoshis being historically significant for a base. If we do break through the October 2021 low and move towards that 56 level, no doubt the Dollar pair will not have reclaimed $0.035 and the steeper drawdown scenario will be underway. That being said, I am more focused on this pair for the longer-term spot position, and so I will be keen to start slowly buying KAI if a range begins to form between 40-60 satoshis, regardless of what the Dollar pair is doing. If that 40 level gives way, I would look to buy as close to the all-time low as possible and again adopt a fixed-risk approach there, allocating a few % of my portfolio to KAI and looking to hold for at least 6 months I would expect.
Verasity:
VRA/USD
Weekly:
Daily:
VRA/BTC
Weekly:
Daily:
Price: $0.022 (51 satoshis)
Market Cap: $99.846mn
Thoughts: The scenarios for Verasity are effectively identical on both pairs, so if we look at VRA/USD, on the weekly we can see that price is being capped by both trendline resistance following a failed breakout and by prior support at $0.025, with price moving lower last week below $0.017 but failing to close below that level. Despite that swing-failure, we are not anywhere near a major support level at present, so I would not take that as a trigger for an entry, but rather would wait for a weekly structure shift (higher-high) following this SFP, or wait for price to move lower if bears remain in control, with that $0.0095 area that acted as support in June 2021 my key level for ap potential bottom. Ideally, over the coming weeks and perhaps months, I would want to see $0.0075 deviated below and then price reclaim $0.0095 as support in order to get involved, with a weekly close back below $0.0075 my invalidation following entry. If that happens, there really is very little support back to the historical accumulation range resistance around $0.0016.
And that concludes this week’s Market Outlook.
I hope you’ve found value in the read and thank you for supporting my work!
As ever, feel free to leave any comments or questions below, or email me directly at nik@altcointradershandbook.com.
