Market Outlook #168 (28th March 2022)
Hello, and welcome to the 168th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Terra, Polkadot, Cosmos, Zilliqa, Curve, Clover Finance and Ampleforth Governance Token.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
And a quick update on the Gelato Coin Report – I am about halfway through writing it, so it will be out on Thursday.
Market Cap: $892.969bn
Thoughts: Beginning with BTC/USD, we can see from the weekly that price finally managed to break out of the multi-week range, previously capped on consecutive attempts at $42k, rallying through that resistance to eventually trade and close above the yearly open, at weekly highs around $46,850. This occurred on good volume and this is a promising resolution of the consolidation for bulls. However, we are yet a few trading days away from the monthly and quarterly end and, for me, it would be far more promising to see this breakout hold for the duration of this trading week going into the weekend. If we start to retrace this from the mid-range acting as resistance at $46.9k, I would want to see $44.6k hold as resistance turned support intraweek, but ultimately as long as March closes above $46.2k, I think we have a good case for another rally into $51.9k, where I would want to look for lower timeframe stop runs to get filled. If, however, we close March back below $42k, this would look like a fake-out and I would expect price to return to the base of the rally at $37.4k.
Now, dropping into the daily, we can see that despite the breakout above yearly open and resistance around $45-46k, we still have the 360dMA, 200dMA and mid-range capping price, so this is certainly not where I would be looking for fresh longs. Rather, as highlighted, I would be keen to see acceptance above $48k and buy a stop run back into (or slightly below) the yearly open. or buy a dip back into the $42k area if we can hold this area into the quarterly close. If I get either of those setups, I am looking for the double top at $52k to get ran, where I would cover.
Price: $3321.64 (0.0768 BTC)
Market Cap: $399.072bn
Thoughts: If we begin by looking at ETH/USD, we can see that price closed firmly above the mid-range, building on the momentum from the previous weekly rally into resistance on growing volume. We closed above that important prior support at $3,000, which was also capping price on successive attempts, so if we can now hold above that level, I would be keen to rebuy any dip towards it as a potential higher-low before a yearly open retest at $3675. Weekly structure is now also bullish on this most recent close marginally above $3284, so there is likely to be more relief to come and I would like to be on board for that. If we drop into the daily, we are sitting up against the 50% retracement of the correction and the 200dMA around $3550, and I would expect that area to act as resistance on the first test, so if we see price then move lower back towards the 360dMA, that would be an area of interest for longs, expecting a front-run of a perfect $3k retest. On the bearish side, if we get back below $3000 and retest it as reclaimed resistance, I would be looking for the next available short as this entire move above $3k would look like a deviation and we’d likely move back towards $2570.
Turning to ETH/BTC, we are still sitting up against resistance but have managed to hold above the mid-range for another week. There isn’t much to add on the weekly timeframe at present, but if we look at the daily for more clarity, we can see that the mid-range is acting as support at 0.0691 and price is now range-bound between there and the 200dMA and resistance at 0.072. Structure is still looking bearish whilst we remain below those highs and if we can now pop higher and close above 0.0733, I would expect to see continuation of this reversal and potentially another run at the top of the range. Break back below 0.069 and I think we move back towards 0.065 for another test of that support base.
Price: $95.02 (0.00202 BTC)
Market Cap: $33.83bn
Thoughts: Beginning with LUNA/USD, for another consecutive week we continue to see price coiling below the all-time high at $105, with tight weekly ranges and low volume. As I have mentioned recently, the trade here for me would be to either see a sweep and rejection of the all-time high, then looking to short back towards mid-range at $74, or look to build a longer-term short position if we break out beyond the all-time high and extend towards $141 on declining momentum on the higher timeframes. For now, no trade. If we look at the daily, we are printing somewhat of an ascending triangle into that all-time high and so if we fake-out below the trendline on a stop run, that would be a higher R long to take for a run of $105, with invalidation below the stop run lows, but as this would be a highly reactive setup it is entirely dependent on whether risk/rewards is actually favourable at that point, though I would imagine it would be. That’s something I am looking for this week, at least. One thing that would lend itself to the sweep + rejection scenario is the fact that we are seeing declining momentum as price has pushed up into the all-time high, so if we do see $105 swept and price break down immediately afterwards, I think we have a high probability short scenario.
Turning to LUNA/BTC, we do see some sort of bearish divergence across indicators beginning to form, with price now moving back into the prior all-time high at 0.00205 to retest it as support. If it can hold above here, there is a possibility that we see another leg higher that will really make plain the momentum shift, if there is one, as any push above 0.00267 on declining momentum would look very weak to me. Conversely, if the current diverging momentum is invalidated on a push higher, we have the case for continuation and can look for high probability longs into those fib extensions highlighted. Looking now at the daily, we do see price struggling to hold up here at the prior highs and if it wasn’t for the fact that we are undoubtedly still in a long-term uptrend with price still having failed to really close below the 200dMA, I would be looking at this as a deviation, but I just don’t think the setup is favourable here for a short with so much support below and structure still pointing higher.
Price: $22.86 (48,650 satoshis)
Market Cap: $22.632bn
Thoughts: Looking firstly at DOT/USD, we can see from the weekly that following the reclaim of $16 as support, price has rallied higher and traded into prior support turned resistance at $23, which is the first major test for this reversal. So far, the pair has failed to reclaim prior support throughout this downtrend, so a weekly close above $23 would shift the picture quite dramatically, with structure then turning bullish off a possible macro higher-low, with the July 2021 low being at $10.30. If we look at the daily, we can see that momentum has also turned bullish on this timeframe and If we do start to accept above $23, I would be keen to begin buying spot with an invalidation below $16 and looking for a retest of historical resistance around $43.
If we turn to DOT/BTC, we can see that the pair is still consolidating but holding key support despite BTC’s advance, which is promising. That being said, price is struggling at support turned resistance at 47.5k satoshis, with a marginal close beyond it last week but nothing impressive, and with further support turned resistance just ahead at 50k. If this zone can get cleared, we have a structural shift whilst BTC is also looking strong, which would give me even greater confidence that this reversal on the Dollar pair has legs. Dropping into the daily, we cab see that daily structure is shifting somewhat off this support base, again possibly looking like a macro higher-low, albeit within a multi-year range. If we can flip 52k as support on the daily, I think we enter dip-buying environment for the next few weeks at least. The invalidation on spot would be a close below the reclaimed support around 43k.
Price: $30.37 (64,620 satoshis)
Market Cap: $8.696bn
Thoughts: If we look firstly at ATOM/USD, that long-term trendline is still being traded below despite the attempt at a reclaim after the breakdown, and price remains capped by reclaimed resistance around the mid-range. Whilst we are below this level, I don’t think there is anything favourable for longs, and I would rather look to get short at $33.50 if we retest it, with invalidation at $35.80, even if only as a hedge for possible long exposure on DOT. Structurally, this looks quite weak to me still and although we do have the higher-low above $20, until we see a weekly close back through $33.50, I don’t want long exposure on Cosmos. If we do see that level closed beyond, I will flip bias and begin looking for longs back towards the all-time high, as structure becomes much more favourable for longs at that point, in my opinion. If we look at the daily, we can see that price is consolidating between the 360dMA as support and the 200dMA as resistance just below that mid-range, lending confluence to the idea that a reclaim of the mid-range would be far more promising for bulls than any of the present price-action. On the bearish side, other than that possible hedge short up near $33, I would only be looking for sizeable shorts on a break and close back below reclaimed support at $25 (where the 360dMA has been holding the pair up), as I would then expect the $20 level to get swept, with any close below that spelling the end of the uptrend for ATOM.
Turning to ATOM/BTC, we can see that price put in a lower high at reclaimed resistance and the mid-range around 82k satoshis and has since traded back into resistance turned support at 60k, just above trendline support. Again, this is a key area for the pair, as a weekly close below 60k would turn weekly structure bearish after rejecting at 2021 highs, whilst also losing the long-term trendline support, making the 82k lower-high look like complacency. Until that happens, however, it is wiser to assume the trend will continue and so, if support holds here, and we see that push through $33.50 on the dollar pair, we have confluence that another leg is likely across pairs and so those dollar pair longs back into an all-time high retest look much more promising.
Price: $0.10 (221 satoshis)
Market Cap: $1.304bn
Thoughts: If we look firstly at ZIL/USD, we can see from the weekly that price saw huge volume come in last week and send the pair flying through trendline resistance from the all-time high off the reclaimed support zone between $0.029 and $0.037, closing above the 200wMA and numerous prior support turned resistance levels and right back up near the 38.2% retracement. Now, if this breakout has legs, we will not be given the opportunity to rebuy back near the base of the rally, given how explosive the move has been, but rather thus prior support around $0.075-$0.08 should now act as a higher-low if we see a dip into that zone, from which you would then expect continuation higher back into the 50% retracement and historical resistance around $0.15. If we look briefly at the daily timeframe, we can see that the 200dMA aligns with that zone and provides confluence for support. Invalidation for any entries in that zone would be a close back below $0.059. That level is a must-hold as it is the high that preceded the SFP into support at $0.033, so it should act as key support once again now that it has been reclaimed.
Turning to ZIL/BTC, we can see a similar breakout pattern off prior range resistance turned support at 98 satoshis, with price rallying on significant volume through trendline resistance all the way into the 200wMA, where it has found resistance. Again, bulls want to see the 166 area hold as reclaimed support, with invalidation on any entries taken at that level – if it comes – on a close back below 138, with the next major resistance at historical support ~344 satoshis. If this reversal is legitimate and price can close the weekly back above 344 over the coming weeks, I think there is a longer-term bull case here for Zilliqa, with 500 satoshis the next major resistance, and that is before we get anywhere near even the 23.6% retracement of the historical bear market – such has been the depression of long-term Zilliqa holders.
Price: $2.63 (5597 satoshis)
Market Cap: $1.232bn
Thoughts: Beginning with CRV/USD, we can see from the weekly that the pair has been in a range for most of its existence, with support at prior resistance ~$1 and resistance at $5.95. Admittedly, this is a vast range, but Curve has failed to do much beyond it for over a year. At present, we are finding support above the reclaimed support level at $1.56, with $1.90 failing to give way and price rallying back above $2.54 from it. However, volume remains very low and the structure is still bearish, with lower-highs and lower-lows for now. If we look at the daily, we can see this more clearly, with the pivot at $2.54 on just being breached but daily structure remaining bearish below the 360dMA. Reclaim that level and dip back into $2.50 and it looks favourable for a long, with the next major resistance up near the 200dMA into $3.90. If, however, we see another wick through the 360dMA and price close back below $2.50, I will be looking for shorts back into the double bottom at $1.90, targeting a retest of $1.56.
Turning to CRV/BTC, price-action is effectively identical, with range support at 3500 satoshis having held the pair up since March 2021, with every accumulation prior to a test of range resistance at 8500 satoshis occurring between there and 4300 on successive occasions. The difference here is that the previous attempt at range resistance succeeded at the turn of the New Year, with price closing and holding above 9700 satoshis, before retracing with the rest of the market over recent months. We have since returned to that 4300 satoshi zone, but remain trading below the 200dM and 360dMA. If we see another leg lower from here into 4270, I’d be keen to begin buying spot as this has been favourable historically, with invalidation on a weekly close below 3480.
Price: $0.39 (832 satoshis)
Market Cap: $101.898mn
Thoughts: As Clover has only been trading for half a year, there isn’t a great deal of price-history, with both pairs appearing identical.
I will focus on the Dollar pair here as the structure is a little cleaner. What is evident when you look at the daily is that the pair has spent the bulk of its existence in a downtrend, with price most recently wicking below $0.31 into a new all-time low at $0.28, but, most importantly, failing to close below that level and now reclaiming it as support. This is starting to look like a classical bottoming pattern following the 93% drawdown from the all-time high and if price can now start to close above $0.41, daily structure will look bullish and I think long exposure would be favourable with a tight invalidation on a close back below $0.30, looking for $0.52 as a first target, followed by $0.69 and ultimately the historical breakdown level back at $0.94. I’ll be keeping a close eye on this for an entry over the next week.
Ampleforth Governance Token:
Price: $7.74 (16,461 satoshis)
Market Cap: $85.92mn
Thoughts: Again, much like Clover, Ampleforth’s Governance Token has only been trading for about 10 months and both pairs look the exact same from a price-action perspective.
Looking at FORTH/USD, we can see that price has been capped by trendline resistance from the all-time high and has been trending lower since inception, trading at an all-time low at $4.43 – another 93% drawdown – back in January. From there, we saw a high-volume buy-up, with price rallying into the 200dMA and trendline resistance but failing there and close back below support turned resistance at $9, which continues to cap the pair. Since, FORTH has run lower to retest the base of the rally and formed a higher-low at $5.25, with price now reclaiming support at $6.77 and coiling higher. I personally would not be keen to get involved just yet given that we are still below key resistance and the historical trendline and 200dMA, but this is looking more promising now than it ever really has been, and if we see a close above that cluster of resistance through $9, I think spot exposure becomes favourable.
And that concludes this week’s Market Outlook.
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