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Market Outlook #174

Market Outlook #174 (9th May 2022)

Hello, and welcome to the 174th instalment of my Market Outlook.

In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Cardano, Tron, Algorand, Curve, Acala Token and UFO Gaming.

As ever, if you have any requests for next Monday’s Outlook, do let me know.

And, I’ll soon be emailing out the May poll for this month’s subscriber-exclusive Coin Report, so if there’s any projects you want included, leave it in the comments.

Bitcoin:

Weekly:

btcusdweekly

Daily:

btcusddaily

Price: $33,366

Market Cap: $635.126bn

Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price continued lower as expected into the cluster of support at $36k, and following the move below that support price broke down rather than found demand and sold off sharply into the weekly close, closing at $34k, marginally above support from the beginning of this year. In doing so, we have confirmed the bear flag as has been marked out for some time now, but we certainly moved lower into $34k even faster than I was expecting. Since, price has continued to push lower this morning to take out the yearly lows, and if we don’t see any demand step in here there is really very little support prior to that $29-30k range support cluster that has held BTC up since 2021. Given last week’s close on increasing volume, I fully expect to see the bottom of that range taken out before we see any meaningful reversal, which has been the key level I have been waiting on for quite some time now. There is always the possibility it gets front-run, but given how many clean lows are in that area I actually think it is more likely we overshoot $29k, capitulate deep through that level and then see serious demand step in and start to put in a longer-term bottom. If we see buyers come in here this week around $33k, however, I think it is more likely to be a small period of relief – perhaps retesting reclaimed resistance at $36.3k – before we continue to move lower. If and when we do get down to the range lows, that is when I will begin scaling into spot that I exited late last year.

Turning to the daily, we can see the immediacy of the sell-off following the loss of $36-37k, which just highlights how little demand there was below that region. Whilst the sell-off is this sharp at present, I don’t expect to see such steepness continue for weeks on end, of course, and we are likely to see some relief either right here depending on the reaction over the next day or two at $33k, or down at $29k. Momentum and structure are firmly bearish and I am primarily looking at the 2021 open at $29k being taken out – and the reaction there – before determining how to be positioned for the coming months. Looking at this, my gut feeling is that Q3 is going to the perfect time to really start allocating capital across the board for long-term positions but we shall see…


Ethereum:

ETH/USD

Weekly:

ethusdweekly

Daily:

ETH/BTC

Weekly:

ethbtcweekly

Daily:

ethbtcdaily

Price: $2,441 (0.0731 BTC)

Market Cap: $294.979bn

Thoughts: Beginning with ETH/USD, we can see that despite some strength shown in previous weeks, as is almost exclusively the case when BTC capitulates the rest of the market follows suit. ETH retested reclaimed resistance around $3000 before continuing lower, back below the mid-range and through trendline support, all the way down to $2425 as of this morning, which was the level I expected to see retested if the mid-range gave way again. We have reached the level very fast indeed, and if we see no bid on BTC I don’t expect a bid to turn up here for ETH, instead expecting a full retracement of the 2022 rally back below $2160. Now, again we have a clean triple bottom at $1715, which has been a key level for over a year, and I would expect ETH to come and take that level out if BTC does indeed continue lower to take out $29k. If we drop into the daily, we can see that there’s only really wicks holding this up above $2160 at present, much like the $33k-36k range for BTC which got filled in with relative ease. If we break down and close below $2160, then I think we may see a bit of a bull trap / relief towards that trendline resistance to put in a lower high before beginning a leg lower into $1715. The reaction down there will be telling but no doubt will be heavily dependent on the reaction on BTC/USD at $29k. Again, if we overshoot, I would be looking to start scaling into spot around the prior all-time highs at $1416, particularly given ETH’s inherently more bullish fundamentals relative to the previous cycle.

Turning to ETH/BTC, we can see that despite some strength shown last week to close the week marginally in the green, this morning has erased that gain, and now we are seeing both ETH/BTC and BTC/USD fall together, which is indicative of the fear in the market and likely to lead to ETH/USD catching up – so to speak – with that fall into $2160. On the daily, the pair is still range-bound between support at 0.072 and resistance at 0.0765 but if we see support fail this week, as mentioned last week this begins to look like a deviation above a longer-term range and we are likely to retrace back into range support at 0.064.


XRP:

XRP/USD

Weekly:

xrpusdweekly

Daily:

xrpusddaily

XRP/BTC

Weekly:

xrpbtcweekly

Daily:

xrpbtcdaily

Price: $0.544 (1637 satoshis)

Market Cap: $26.316bn

Thoughts: Looking firstly at XRP/USD, we can see that price moved as expected towards the support cluster between the 200wMA at $0.50 and $0.58. This is a key support zone for the pair that has held it up since Q2 2021. If we start to break and close below $0.50, I would expect another leg lower to follow into the 360wMA and prior range highs at $0.40. Given how each bounce off this zone has led to lower highs, I would not expect much by the way of relief, with any bounce back towards trendline resistance a clear short opportunity. Turning to the daily, we can see how prior support is turning to resistance as the pair moves lower and the 200dMAa and 360dMA are now acting as resistance, where they had largely supported the trend for well over a year prior. Over the coming weeks, if we see another dead cat into that cluster of MAs, I will again look to short. Ultimately, I think this is heading back towards the $0.24 area.

Turning to XRP/BTC, we are starting to see those key local supports give way, as price just about hung on above 1500 satoshis last week, printing a small bounce directly into resistance. If we see a weekly close below 1500 this week, I think things get a lot worse for XRP, with the next level of support down at 940. If we look at the daily, the pair is still hanging on inside this long-term range, but ultimately, in these market conditions, I don’t expect support to continue to hold, particularly with prior support now acting as resistance and momentum beginning to kick in to the downside.


Cardano:

ADA/USD

Weekly:

adausdweekly

Daily:

adausddaily

ADA/BTC

Weekly:

adabtcweekly

Daily:

adabtcdaily

Price: $0.688 (2070 satoshis)

Market Cap: $23.27bn

Thoughts: If we look firstly at ADA/USD, it is continuing to play out the textbook bear cycle, with last week retesting prior support as resistance at $0.89 and continuing lower into the weekly close below $0.75. I have now covered all ADA shorts and if this week closes below $0.74, which is looking likely at present, I will look for fresh short opportunities next week to take lower towards the 200wMA at $0.53 and then the $0.42 level. If we are indeed in for a 2018-esque bear market for altcoins from here, then I would expect the bulk of the rally to be retraced back into the original support level from 2018 at $0.08 – but that is likely many months away if we do see it at all. Regardless, structure and momentum are bearish and price-action is clean here for shorts, with longs only becoming favourable for relief down at the 200wMA and below. If we quickly glance at the daily, I have put in a trend extension which shows the 1.618 fib lining up roughly with the next major support level, which is good confluence for a short target.

Turning to ADA/BTC, the pair is just about holding up above support at 2000 satoshis, but bounces off the level are becoming weaker and I would expect this level to give way soon and lead to another 20-25% retracement into the 200wMA and historical resistance turned support around 1500-1600 satoshis, which is where short exposure on ADA becomes much less favourable. If we then see another dead cat and then lose the 200wMA, we can start thinking about another leg lower towards the 950 satoshi area.


Tron:

TRX/USD

Weekly:

trxusdweekly

Daily:

trxusddaily

TRX/BTC

Weekly:

trxbtcweekly

Daily:

trxbtcdaily

Price: $0.085 (254 satoshis)

Market Cap: $8.377bn

Thoughts: Looking firstly at TRX/USD, we can see from the weekly that price has just turned market structure bullish in the face of a market-wide bloodbath, which is promising. We saw the pair basing above support at $0.054 for weeks before beginning to turn higher, printing a series of higher-highs and higher-lows, with last week closing firmly above $0.08 but right into trendline resistance from the 2021 high. This, it goes without saying, is not the place to start loading up on longs if you aren’t positioned. Rather, I would look to hedge here if I had leveraged exposure and look for fresh longs on a close above $0.10 to take out $0.125 and potentially higher into $0.15. Looking at the daily, any pull-back from this zone between resistance at $0.089 and trendline resistance back into the 200dMA and prior resistance turned support at $0.071 would be a buying opportunity for me given market structure at present. If this is to be a failed attempt at a trendline breakout and price resumes downward with the rest of the market, I will exit any long exposure from $0.071 fills at $0.053 and look for shorts on a clean breakdown below there all the way back towards $0.027.

Turning to TRX/BTC, again price has rallied hard off support but has come straight into the 200wMA and historical support turned resistance between 250-260 satoshis. I would not want to taken on any long exposure right here but if we dip back into 215, that could be a nice entry for another leg higher, assuming the market continues upwards. The lower risk option on exposure would be to await a close above 306 satoshis, clearing out years worth of resistance, where then there are blue skies all the way into 466 satoshis and likely beyond into major resistance above 865.


Algorand:

ALGO/USD

Weekly:

algousdweekly

Daily:

algousddaily

ALGO/BTC

Weekly:

algobtcweekly

Daily:

algobtcdaily

Price: $0.71 (2131 satoshis)

Market Cap: $4.84bn

Thoughts: Beginning with ALGO/USD, we can see that price continues to trend lower, with the pair dropping into historical resistance turned support at $0.53 a couple of weeks ago and bouncing off that level last week on great volume, but right into reclaimed resistance at $0.77. On the weekly, structure is still bearish but it does look like there’s some minor divergence on the RSI. That said, I wouldn’t be looking to long this yet either, rather opting for a clean structure break on a higher high above $0.93 before looking for any dips to buy, as right now we are simply trading a lower high into resistance. If we look at the daily, I do like how price sold off hard below major support at $0.67 and then has immediately reclaimed it, so if we now see $0.67 act as support and ALGO push on higher back above $0.77, then we may well have the makings of some sort of reversal off historical support. If $0.77 continues to cap price and we see the pair break back below $0.67 over the next day or two, I would expect another leg lower to follow into $0.48.

Turning to ALGO/BTC, price found support at 1433 satoshis and bounced hard, taking out the previous several weeks of selling, but trading right back into support turned resistance around 2200 satoshis, which is a critical level historically for ALGO. If it can flip that level back into support, ALGO may be one of the very few projects that looks promising for the coming weeks and I would expect further relief, first into 2640 satoshis and then all the way into major resistance at 3900 if that minor level gives way. Looking at the daily though, we see strong confluence of resistance at 2650, with trendline resistance and both key MAs sitting there, so any long exposure would be wisely hedged if the pair does see further action up into that area.


Curve:

CRV/USD

Weekly:

Daily:

crvusddaily

CRV/BTC

Weekly:

crvbtcweekly

Daily:

crvbtcdaily

Price: $2.22 (6638 satoshis)

Market Cap: $1.024bn

Thoughts: Beginning with CRV/USD, we can see that the $1.91 to $3.17 range has held price for months now, with price mostly chopping around the middle of that range. Whilst it is within this range, there isn’t a great deal to gleam from this price-action. If, however, we see a clean break and close below $1.91 – following such a long period of range-bound price-action – I would expect another leg lower to follow, likely taking price all the way back towards the major resistance turned support at $1.03. Close above this current range and we have bullish market structure after a long period of consolidation, and we will likely see a strong trend follow back towards the 2021 highs. Staying patient on this one.

The picture is largely the same on the BTC pair, with price continuing to hold above support at 4920 satoshis but capped by range resistance at 8500, below which it has spent the bulk of its existence, except for a brief deviation at the turn of the year. If we look at the daily, price is also being capped by the 200dMA and 360dMA at present, but structure has cautiously turned bullish with higher-highs starting to form. If this can continue and price can break through that range resistance, I think we have another case for an outlier and I would be looking for long exposure on CRV. If, instead, we get slapped back down from up there and price returns to take out historical range support at 3500 satoshis, I would be looking to build a longer-term position in CRV down at 2200.


Acala Token:

ACA/USD

Daily:

acausddaily

ACA/BTC

Daily:

acabtcdaily

Price: $0.76 (2342 satoshis)

Market Cap: $308.533mn

Thoughts: Acala is a project on my watchlist as it appears to have decent fundamentals and has only really experienced a sidewards or down-trending market.

Both pairs look identical given that it has only been trading for a few months, so I will focus on ACA/USD. If we look at the daily, price made its all-time high immediately upon trading at $2.86 and then trended lower all the way into $0.83, which became the all-time low in late February. Price then experienced a brief rally but only into $2.18 in early April, which became a lower high from which price has continued to bleed lower. Over the past few weeks, price retraced all the way into that all-time low, turning support into resistance on the way, and as of today has made a new all-time low at $0.75. We are now drawn down about 73% from the all-time high, which isn’t particularly brutal in a bear market, and so I am currently holding off from entry. I would however like to get involved if we see one of the two following things: either price continue to bleed lower over the next few weeks and perhaps months and we see a 90% drawdown from the high or greater, at which point I want to see a range form and then scale in; or we – and it would be a surprise – see demand step in here this week and reclaim that $0.83 level, and price then begin to flatten out and range above it. Either way, this is one that is now on my radar for a future position.


UFO Gaming:

UFO/USD

Daily:

ufousddaily

Price: $0.00000391

Market Cap: $103.599mn

Thoughts: Another project that has been on my watchlist is UFO Gaming, which has an unbelievable supply of over 25trn UFO, hence the pricing and why I have only provided a USD chart.

Looking at UFO/USD, price played out a textbook market cycle, beginning with its first bull cycle that took it to an all-time high of $0.000055, which led to the current bear cycle, with price continuing to bleed lower and recently taking out historical resistance turned support at $0.00000721 and reclaiming it as resistance. The pair has moved lower since all the way into $0.000004, within the range of the first mini-rally from back in Q3 2022. I do not think this market has bottomed out yet at a 93% drawdown from the all-time high, and I have marked out what I want to see happen before I get involved and scale into a long-term position. In effect, I want the anger and depression phases of the cycle to now play out and take price another 50% or so lower into the original accumulation range from July 2021. That would give UFO a drawdown around 96-97% from the all-time high, which is not uncommon in altcoin bear markets, and there I want to see price begin to form a new range. If we get back near that original range and see price flatten out there, then I will begin a bag for 2023.

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.


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