Market Outlook #173 (1st May 2022)
Hello, and welcome to the 173rd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, BNB, Dogecoin, Cosmos, Monero, Harmony, Secret and Illuvium.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Market Cap: $740.301bn
Thoughts: If we begin by looking at BTC/USD, on the weekly we can see that, as expected, last week’s price-action saw the pair continue lower into the support cluster that preceded the failed rally into the yearly open, with price wicking as low as trendline support into $37,400. Price ultimately closed the week a little higher at $38,470, but well below the previous weekly close and on increasing volume. Price remains capped by local trendline resistance but is now in an area that could provide support, so the next couple of weeks of movement will be very interesting.
If we drop down into the daily for a clearer picture, we can see that price is chopping lower into that support cluster, making lower-lows and lower-highs but not really finding any momentum as we retrace deeper, but with no divergences appearing either to indicate a potential reversal. The prior support at $39,600 is now acting as resistance but price has thus far failed to really clear out that cluster below $37,400 – the area from which I would most expect there to be adequate liquidity for a reversal to form. It may be that we are bouncing now early in the week to form a weekly high below that $39,600 area and below trendline resistance, from where we could see another leg lower into $36,300 to sweep all the swing-lows, and as I have mentioned before the reaction there will be telling. If no demand steps in and we start to close below that area, there is really no demand holding this up above $34k, so I would expect those wicks to get filled in swiftly. If, however, we dump into $36k and start seeing a bid into the weekly close that takes this back above $37.4k, there is a possibility of a bottom formation with that swing-failure. Ultimately, I see longs as more favourable if we can get some momentum back above $40k, where I would then expect another 5% rally into the $42k resistance zone. The more probable scenario, however, is that we continue lower from here towards that $34k level. In all honesty, if we do close and break down below $36k though, this looks very much like a bear flag and the leg lower will likely be much more extended than just a $34k retest, and I’d be looking at the bottom of the range to finally get swept at $29k.
Price: $2,843.58 (0.0732 BTC)
Market Cap: $342.064bn
Thoughts: Beginning with ETH/USD, the weekly timeframe shows us that price followed BTC lower last week right into that trendline support, with price ultimately pushing back into the weekend to close marginally below the mid-range at $2840. This still looks much better than Bitcoin here, to be honest, and if the pair can continue to hold above this trendline support and start pushing back above $3000, it will look very much like a higher-low, at which point we can look for long setups at least back into $3284 to retest that resistance. If, however, ETH follows BTC lower again and trendline support is lost here and price closes below it, I don’t think $2660 is going to provide a great deal of support and I would instead expect to see the support that preceded the rally to be retested at $2426, much like BTC. If we look at the daily, trendline resistance is capping price here and again we have a choppy downtrend into some support, with no divergence appearing to indicate a reversal formation. Back above $3000 is the clearest signal for longs for me here. Until then, lower towards $2426 and, if that level gives way, I do think that triple bottom at $1700 is getting taken out over the coming months.
Turning to ETH/BTC, we continue to consolidate with tight weekly ranges, with price finding some support around 0.073 at present, which is promising. As long as we are above this area, it still looks like resistance turned support and if price starts to flatten out this week around this level we may well be forming a higher-low from which to spring higher, and then ETH/USD might look quite different to its current predicament. However, it’s more probable that if BTC really starts to break down below key support, ETH goes down with it and if this support cluster gives way, as we can see on the daily timeframe, then this move above the 200dMA looks like a deviation and we re-enter the Q1 range, where if we start to move back below the mid-range at 0.069 I would fully expect an unwind of this entire rally back into 0.064.
Price: $389.92 (0.01004 BTC)
Market Cap: $63.665bn
Thoughts: If we begin by looking at BNB/USD on the weekly timeframe, we can see that price continues to be range-bound between resistance around the mid-range at $460 and support around $356, having rejected at the mid-range a few weeks ago and now moving lower. If we look at the daily, we can see that the 360dMA is also acting as resistance now and daily structure is bearish but choppy. Whilst the pair is below that $460 level, I think it is more likely we see a breakdown below $356 and begin another leg lower, particularly with how the rest of the market is currently looking, and I’d be looking to short a breakdown below $356 into $317, where it is favourable to hedge and wait for a close and breakdown below that level to look to play shorts all the way back into $254. If we catch a bid above $356 and somehow breakout above the mid-range, that’s when I would look to play longs towards $550.
Turning to BNB/BTC, we can see that price is sandwiched between resistance turned support at 0.009 and reclaimed resistance at 0.0105. Again, looking at the daily for clarity, we can see that the 360dMA and 200dMA are currently supporting price but that everything is flat at present with effectively no volatility for the past few weeks. Periods of tight consolidation lead to periods of expansion and if we see a breakdown below the 360dMA and the mid-range and 0.0096, I would expect that 0.009 support to give way and lead to another leg lower towards 0.00774. If, however, BNB can buck the market trend and pop higher above 0.0105, strangely enough there is then only one level of resistance really capping price below the all-time high, and so longs certainly become more favourable. I am leaning bearish here and if both pairs align, there could be the opportunity for a large swing short towards $250 that appears over the coming weeks.
Price: $0.131 (338 satoshis)
Market Cap: $17.444bn
Thoughts: Looking firstly at DOGE/USD, on the weekly we can see that price continues to find support above key resistance at $0.10 but is struggling on successive attempts to reclaim support at $0.16, with it providing resistance last week. If we see that $0.16 level give way and price close above it, I do think this begins looking more like a reversal off a key pivot and we could be in for extended relief; however, given the present failure to push beyond that resistance, I expect another test of $0.10 to be on the way soon. If we close the weekly below there, I think this is going all the way back the $0.04 and I would be looking to play shorts throughout that range. Really clean structure here for us to play either side depending on how the next couple of weeks unfold.
Turning to DOGE/BTC, the picture is largely the same here with prior support acting as resistance at 368 satoshis but the pair continue to hold above historical highs turned support at 295. Break down below that support and there is no support at all all the way back into the 200wMA at 182 satoshis, which is a 30-35% retracement. Close the weekly above 368 and we have market structure beginning to look more bullish with the first successful reclaim throughout this correction, and I would then look to play the dollar pair higher if a setup presents itself with the next major resistance on the BTC pair up near 500 satoshis. Keeping it very simple here given how nice this structure is.
Price: $17.95 (46,200 satoshis)
Market Cap: $5.139bn
Thoughts: ATOM finally broke down as expected, and, if we begin with ATOM/USD, we can see on the weekly that rejection from the $33 resistance area was the catalyst for a return to range support at $20 and the mid-range of the previous leg higher at that same level, with last week seeing that pivotal level traded straight through and closed below, with price opening up at $18 this week. This is a major breakdown in my opinion from what now looks like a long-term distributive range. In short, cyclical top more than likely in for the foreseeable future. The only way I think this can turn positive is if this is a deviation below that key level and we immediately reclaim $20 this week and start turning daily structure bullish subsequently, but I am certainly expecting more downside, with the next major support zone between $14.60 and $16.25. Looking at the daily, I have provided what I expect to be the trajectory following this breakdown – assuming it is not a deviation and we stay below $20 – with any breakdown below $16 following a lower-high providing a possible swing-short to hold into $10.55 over the coming weeks and potentially months.
Turning to ATOM/BTC, the long-term trendline support was broken and closed below and key resistance levels have been reclaimed following that loss of 60k satoshis, with trendline resistance continuing to cap price. We are now trading all the way back into the support that preceded the rally at 45k satoshis, which would be where I expect some demand to step in as this is the final stand before a huge structural shift from the 2021 lows. If we see this support cluster closed below, I think this is going all the way back to 25k satoshis. If we start to base around 45k here, it becomes a different story, but this is not looking great at all for the remainder of 2022, at present.
Price: $211.75 (0.00545 BTC)
Market Cap: $3.837bn
Thoughts: Looking at XMR/USD, on the weekly we can see that price wicked above the $250 swing-high all the way into reclaimed resistance at $287.50 but failed and printed a swing-failure, with an immediate rejection last week that sent price from the open at $250 all the way down to $212 at the weekly close. This is not what bulls want to see following a strong rally, as this now looks like a bull trap to me and I would expect to see Monero move back towards $193 from here, which is a key level to hold above as support if this reversal is to continue. If we close back below $193, I think this is a failed rally and I would expect the 200wMA to be retested as support at $134. Turning to the daily, if we see price rally up from here into $251, form a lower-high and then break back below $207, I would look to short first into $193 and then into $145 if that level gives way.
Turning to XMR/BTC, we managed to close above that historical trendline resistance a couple of weeks ago, wicking into 0.0071, but price immediately broke back below the trendline and has returned to key resistance turned support around 0.0054. If this is not a failed breakout, price should find strong support here and start to push back up sharpish, in which case the short scenario for the dollar pair is invalidated and if we close the weekly back above 0.006 longs become favourable again. If, however, this is a failed breakout, I would expect price to break back below 0.0054 and reclaim it as resistance, leading to a full unwind of this rally back towards range support at 0.00375.
Price: $0.083 (214 satoshis)
Market Cap: $991.172mn
Thoughts: If we look firstly at ONE/USD, we can see from the weekly that price is continuing to print bearish market structure with successive lower highs and lower lows, turning prior support into resistance. Last week saw the pair lose support at $0.11 and wick all the way into support at $0.067 above which it is currently sitting. I see no reason why this trend lower ends here but we are approaching the support cluster that formed the bottom of the range on the previous correction, thus shorts become less favourable as price trades towards $0.046. I do think we could get a little relief from here back towards the trendline, but that for me would be a short opportunity for another leg lower into $0.057 if it comes. Ultimately, I am not looking for any longs unless we wick below $0.046 and start to base back above it, or we break and close below the level and trade all the way back down to the 2020 highs around $0.015, where one could start to scale in all the way down to $0.004, if we see a bear market like 2018.
Turning to ONE/BTC, we are sitting right at support here at 193 satoshis having deviated above historical highs and since broken down and bled lower, and given that context I am not expecting much of a fight to be put up here, instead expect to see continuation lower towards the historical pivot and reclaimed support around 112-124 satoshis, which would be the first major support I’d look to buy for a bounce with spot. That area may well be where a new accumulation range begins to form, in which case I would start looking for a long-term position.
Price: $3.79 (9754 satoshis)
Market Cap: $618.113mn
Thoughts: Beginning with SCRT/USD, we can see that price trading above the prior all-time highs at $8.50 was a deviation with the pair failing to hold above it and since printing lower highs into support at $4.18, which last week finally gave way. This is exactly what distributive cycle tops look like to me and despite trendline support being not too far away, based on how price rejected above prior all-time highs and the subsequent structure and momentum, I would not look to catch this knife. Instead, I expect to see another leg lower begin here with price trading back towards the 200wMA at $1.53 as the next major support, with minor support in between at $2.27. I am wrong on this if we reclaim $7.20, above which structure turns bullish and we can start considering another run at price discovery but it really does not look likely right now.
Turning to SCRT/BTC, we are sitting right above an important pivot zone between the 200wMA at 6144 satoshis and 7926 satoshis. Whilst the pair is above that, that breakout scenario outlined in the previous paragraph is possible, as we could see price catch a bid above the 200wMA and start moving higher again. However, given that we failed at 19k resistance, broke down and turned market structure bearish with a lower high at 15k and last week’s lower low below 10k satoshis, I think it is more likely that momentum has shifted to the downside here and that we will see 8k retested over the next couple of weeks, with any close below that leading to a 200wMA retest. Lose that and there is literally no support here all the way back into 2850 satoshis, which would be where I would look to build a long-term position.
Price: $470.24 (0.0121 BTC)
Market Cap: $306.837mn
Thoughts: Given that Illuvium has only been trading for a year, both pairs look pretty much identical and I will opt for the Dollar pair as it has cleaner structure.
Looking at ILV/USD, we can see that its first major bull cycle played out with the all-time high at $1915 in later November and it has since been playing out a textbook altcoin bear cycle, bleeding through the various stages into support at $470, where it currently sits, 76% drawn down from that high. Now, classic cycles tend to see 90%+ draw-downs for altcoins on the Dollar pair, and if we look at a 93% draw-down, that would take us all the way back to the original range resistance that preceded the cycle at $128, which would be a no-brainer area to begin a new position if you are keen on Illuvium’s fundamentals. However, right now it does look like the price-action from February 2022 onwards has been flattening out into and below the 360dMA, which looks more like the depression stage of the market cycle than anything else, which would suggest that this $387 prior resistance should act as the ultimate bottom before disbelief and a new cycle, though this could take months to play out. As such, I will look to buy a small position in ILV here with a stop on a close below $387, as I don’t think it can buck the trend of the rest of the market but this doesn’t look that bad relative to other projects and is the sort of structure I would usually like to buy. If $387 does give way, I am out and I would instead expect another huge drawdown from there back into the original range, where I would look to build a position.
And that concludes this week’s Market Outlook.
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