Market Outlook #166 (14th March 2022)
Hello, and welcome to the 166th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Terra, Avalanche, Polkadot, THORChain, Quant and Convex Finance.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $39,055
Market Cap: $741.668bn
Thoughts: If we begin by looking at BTC on the weekly timeframe, we can see that the picture has not altered a great deal from the previous week, with last week’s price-action seeing the pair rally off support at $37.4k back into resistance at $42.1k – where, as outlined last week, I took a short position that has now been covered at $39k – but ultimately retrace that rally to close at weekly lows ~$37.8k. Price continues to hold above that support zone but rallies off support are getting weaker and being immediately retraced. That said, as I have mentioned multiple times over recent weeks, this zone between $37k-$42k is nothing more than a scalp zone – there is no real bias for me here as support continues to hold and price continues to reject at overhead resistance. If we see a weekly close below this cluster of support between $36.3-$37.4k, then I think we have the trigger for further downside and a short bias back into $34k at the very least, if not all the way down to range support at $29k. Likewise, if we see a weekly close above $42.1k, I think we can look for longs back into the yearly open, then look to cover and re-open if the yearly open is reclaimed for further relief towards $52k. That is the framework I have at present.
Dropping into the daily, we can see the weakening rallies and immediate retracements more clearly here, however, unlike last week, if we do see a rally off this support back into $42k, I would not look for shorts again, at least not immediately; rather, I would want to see last week’s high swept and then see a breakdown back below $42k on the lower timeframes to try to play that short back into $39k again. If we don’t sweep the high but rather begin to accept above it, I have no trade this week until the weekly close confirms a breakout beyond that resistance. If we break and close below $37k and begin to retest that cluster from below as resistance, I will look to get short for another run of $34k as a first target, as the momentum here continues to point lower for me. I am not looking to reallocate more spot to BTC until we see higher timeframe acceptance above $46.3k or we see capitulation through $29k and then a reclaim.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $2598.34 (0.0663 BTC)
Market Cap: $310.672bn
Thoughts: Looking firstly at ETH/USD, we can see from the weekly that again the picture has not really changed over the past week, with another rejection at trendline resistance following a rally off support, leading to a weekly close at the lows and below last week’s low. Momentum and structure remains bearish here until we see a trendline breakout and close above $2850. Dropping into the daily, unlike BTC, ETH/USD failed to hold the support at $2570 that acted as the base for the prior week’s rally into resistance, instead closing below it, rallying into a lower high at trendline resistance and subsequently moving back below $2570. We are seeing an early bounce this week but again, unless that is sustained and leads to a breakout and close above last week’s high, turning structure bullish on the daily, there is nothing to get excited about yet. It is more likely at present that we see a weekly high form early this week and continue lower below $2425 towards $2300.
Turning to ETH/BTC, we have seen the first sign of some sustained demand in recent weeks as price swept the prior weekly low into demand at 0.0642 and rallied off it, closing at 0.0666. If we are to see a shift in momentum, this rally needs to be sustained this week and take the pair back beyond the mid-range and trendline resistance ~0.069; if we see that, I think we may be looking at a possible higher-low and thus maybe a turning point for ETH performance. If, however, current structure remains as it is and 0.069 continues to act as resistance, I would expect the 0.0642 support to give way on the next push lower and send the pair back towards May lows, where I would expect much more demand to step in.
XRP:
XRP/USD
Weekly:
Daily:
XRP/BTC
Weekly:
Daily:
Price: $0.77 (1977 satoshis)
Market Cap: $37.092bn
Thoughts: Beginning with XRP/USD, on the weekly we can see that the pair continues to be capped by trendline resistance, but that despite the lower high into $0.92 a few weeks ago, the subsequent sell-off only took the pair back to support at $0.65 to form a higher-low, above which it held well. We have since pushed higher back into resistance around $0.77 where price continues to consolidate. The real test of a momentum shift here would be to now break and close beyond both trendline resistance and the lower high at $0.92, which would be a weekly structure reversal and would indicate further relief to come. I would then be looking to buy a retest of $0.92 as support and look for $1.12 as the first target, followed by major resistance at $1.41. If bearish structure holds, the trendline should continue to cap the pair and we will see price move lower over the next couple of weeks, where any close below $0.65 would, in my opinion, lead to another 25% sell-off back into the 200wMA at $0.50.
Turning to XRP/BTC, again we are seeing some signs of a momentum shift here as price held above reclaimed support at 1500 satoshis, bounced higher into resistance at 2100 and has since printed a higher low and is now contesting a breakout beyond the cluster at 2100-2250, which would turn weekly structure bullish off of historical support. This would shift my bias towards XRP longs and I would expect further outperformance at least into the ~3k-satoshi area, where there is significant resistance. If, however, we see 2100 continue to cap price and the pair break lower again, I would be looking for a weekly close below 1485 satoshis to really get aggressive with XRP shorts, perhaps at that point looking for a synthetic XRP/BTC short back into 950 satoshis.
Terra:
LUNA/USD
Weekly:
Daily:
LUNA/BTC
Weekly:
Daily:
Price: $94.11 (0.00239 BTC)
Market Cap: $34.855bn
Thoughts: Looking firstly at LUNA/USD, from the weekly we can see that price continues to tackle the all-time high / range resistance at $105, having wicked towards it the previous two weeks but failed to break beyond that level. Despite that, we are seeing higher weekly closes and the BTC pair is in price discovery, so I would expect to see that level cracked soon. As mentioned a couple of weeks ago, what I am looking for is signs of waning momentum across the AO and weekly RSI in order to begin looking for shorts, where we may yet see a push towards $142 but have that coupled with bearish divergences. If we look at the daily, we can see that price formed a higher low above the mid-range last week and rallied into the all-time high from there, now forming another higher-low and likely moving for another crack at a breakout. Despite this structure, we are seeing momentum already wane on the daily, with bearish divergence on both AO and RSI at present. If we break beyond $105 and then close back below it, I am keen to see another lower high on RSI and AO to then look for shorts from the $100-105 range back towards the mid-range as a first target. If these divergences are invalidated as price closes above $105, I would look for longs towards $141.
Turning to LUNA/BTC, we can see that price made a new all-time high last week through the 1.618 extension into 0.0027 BTC, then rejecting and closing at 0.00231, still firmly above the breakout zone at 0.00205. As long as the pair holds above 0.00205, I would expect to see another push higher, beyond the 1.618 towards the 200% extension at 0.00295. Dropping into the daily, the trend remains pointing higher as price has flipped the prior highs as support and now looks to form a higher low. Close the daily above 0.00267 and I think we see that extension into 0.00295 which will likely bring with it the breakout beyond the high on the dollar pair. Next couple of weeks likely very important for the mid-term trajectory of LUNA.
Avalanche:
AVAX/USD
Weekly:
Daily:
AVAX/BTC
Weekly:
Daily:
Price: $71.07 (0.00182 BTC)
Market Cap: $18.93bn
Thoughts: Looking firstly at AVAX/USD, on the weekly timeframe we can see that trendline resistance continues to cap price, with momentum not looking any better, as last week’s price-action saw a rejection at reclaimed resistance ~$82 leading to a sell-off into weekly lows, firmly through the prior weekly low. We are now sitting just above prior resistance turned support at $64, below which price failed to close on the previous leg lower, so if there is sustained weakness here I would expect to see that level closed below, leading to a $54 retest. Lose that level and there is only minor support at $48.70 prior to major support at $39.40. Dropping into the daily, we can see that the 200dMA is starting to act as resistance, but we remain above the 360dMA for now. If this $64 does manage to hold, bullish price-action, for me, would be a rally back above $82 and thus a trendline breakout and 200dMA reclaim: if that occurs, I think we have a case for favouring longs, but at present I see no signs of this. Looking ahead, if we do move lower towards the 360dMA at $54, that would be a good spot to play a bounce, but what I would want to see for a larger spot allocation would be something similar to the previous correction – a period of range-bound accumulation below the 360dMA but above key support.
Turning to AVAX/BTC, we are sitting on trendline support at present, albeit weak support, but the main takeaway here is that prior resistance is currently acting as support at 0.0016. Above this level, the pair is simply range-bound above historical resistance and below the all-time low. Lose that level, however, and this looks like a distribution range above prior highs, which would lead to me to believe we see a full unwinds of the rally from October back towards major resistance turned support around 87k satoshis.
Polkadot:
DOT/USD
Weekly:
Daily:
DOT/BTC
Weekly:
Daily:
Price: $17.69 (45,290 satoshis)
Market Cap: $17.475bn
Thoughts: Beginning with DOT/USD, we can see on the weekly that price is beginning to flatten out having been trending lower for months, with the last couple of months of price-action being supported by the $16 area, with wicks below – most notably a capitulation wick lower into historical demand above $11 – but failure to close below it. If this $16 area continues to hold here and lower timeframe structure begins to shift, we may have a case for a bottoming formation. Dropping into the daily, we can see that trendline resistance is no longer capping price and that the $16 level, having been deviated below, has now acted as support on a reclaim. If we can push back above $20 from here, daily structure turns bullish and I would be looking for longs again on this pair, with invalidation on a close below $16.
Turning to DOT/BTC, we can see a similar structure, with price flattening out above the Q3 2021 demand zone, finding support around 44k satoshis. If we look at the daily for clarity, we can see that the AO is showing declining momentum on recent pushes lower, with price now turning market structure bullish on the most recent push into 47.7k satoshis. I could now conceivably look for entries on a retest of the 44k level, anticipating a breakout beyond 48k and a push towards 52k, or opt to wait for that close beyond 48k before getting involved. I think getting involved at 44k makes more sense for me as invalidation is clear – lose that support zone and this all looks like a bull trap before further downside.
THORChain:
RUNE/USD
Weekly:
Daily:
RUNE/BTC
Weekly:
Daily:
Price: $7.01 (17,950 satoshis)
Market Cap: $2.318bn
Thoughts: If we look firstly at RUNE/USD, we can see that it has seen a strong recovery over the past three weeks, having bounced at now-triple-bottom support ~$2.98. Although that clean triple bottom at a round number should make you uncomfortable, I think for now bulls have regained control, as demand stepped in with volume and has turned market structure bullish. From here, I would be looking to long any pullback into the $5.30 area, as that was a key level to flip on the daily and we are now pushing into a cluster of overhead resistance around $7.20, above which the 360dMA and 200dMA are sitting, so a breather is expected. If we don’t get the pullback, no trade for me until way higher on a reclaim of $10, where I would play that into the mid-range at $12.44 and then into trendline resistance from the all-time high. I don’t think this is the bottom before new all-time highs, although if it is then jolly good for spot holders. Instead, I think the current narrative drives the pair higher into a third macro lower-high and then we see another correction to take out the $3 triple bottom, where capitulation below that level followed by a reclaim would start looking like a longer-term bottom for me.
Turning to RUNE/BTC, we can see that price is now sitting up against prior support turned resistance at 19k satoshis and I would expect to see a pullback towards the reclaimed support zone ~13k, where again I would look for longs for another push higher. Invalidation is if we close below 10k satoshis, at which point I would then think that the bearish bias has resumed and that we are likely to move much lower, towards the range support at 3.5k satoshis over the coming months. If I do get my ~13k entry and we push higher, I would look to cover at 22k satoshis, shifting bias towards shorts. Break and close beyond 25k satoshis however and I am wrong on the expectations of much lower prices, and I would expect to see another run at the all-time high from there.
Quant:
QNT/USD
Weekly:
Daily:
QNT/BTC
Weekly:
Daily:
Price: $113.53 (0.00291 BTC
Market Cap: $1.37bn
Thoughts: Quant is a project I very much want to rebuy for a long-term spot position, but I am uncertain if we are quite at the levels that look attractive. If we begin with QNT/USD, we can see that the pair has been capped by trendline resistance since the all-time high and is now sitting on a 75-80% drawdown above prior resistance turned support at $100. It is possible that, following the huge capitulation into $100 from above $150 several weeks ago, price is now bottoming out and forming a range from which to begin a new cycle. If that is the case, I would expect to see this $100 support hold for many more weeks and the trendline to no longer cap the highs, where I would then look to buy as close to $100 as possible, perhaps in April, with invalidation below $86 and looking for $150, followed by $186, followed by $433 over the next 12-18 months. However, I am leaning more towards the likelihood of another leg lower, back into the range that preceded the mega-rally, near $50. That area acting as a re-accumulation range above historical trendline support would be very attractive and more in line with bear market drawdowns at 89%, if not a little lower. I will be keeping an eye on this over the coming weeks, for certain.
Turning to QNT/BTC, we can see the classical accumulation range followed by a textbook bull cycle that has now drawn down 75% from the highs, but we have not yet see depression. At present it looks like we are in the capitulation phase of the bear cycle, from which point we usually see a longer, more drawn out bleeding back into historical levels, which for Quant would be range resistance between 0.0013 and 0.00167. If we look at the daily, I have marked out what would be classic trajectory if the remainder of the bear cycle is to follow, where the zone between 0.0013 and 0.00167 would potentially mark out the new accumulation zone. If we see that occur, I am 100% getting involved down there and holding long-term.
Convex Finance:
CVX/USD
Daily:
CVX/BTC
Daily:
Price: $16.14 (41,330 satoshis)
Market Cap: $866.816mn
Thoughts: As CVX has only been trading for under a year, both pairs look identical, so I will focus on CVX/BTC here. If we look at that pair, we can see a similar textbook cycle to QNT, with a flat range forming a base in July 2021 leading to an extended bull cycle into December 2021 and now a bear market, with price losing the 200dMA last week. If the textbook bear cycle continues to play out, I would expect to see the pair return to the resistance of the range that preceded the bull cycle, which is potentially all the way down at 18k satoshis. We may not get that far, and if we start to see bearish momentum wane and price flatten out between 31-36k satoshis, that too would be a key historical area and thus not a bad spot for a new accumulation range to form. What I am not doing is blindly bidding here, as structure remains bearish and there is no sign of re-accumulation as of yet.
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.
