Market Outlook #177 (30th May 2022)
Hello, and welcome to the 177th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, BNB, Solana, Cosmos, Aave, Arweave, Ethereum Name Service and WOO Network.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Market Cap: $582.895bn
Thoughts: Beginning with BTC/USD, we can see from the weekly that last week saw price consolidate once again right around range support at $29k, with price rallying off the weekly open today going into the monthly close. I expect that this is likely just some month-end covering and, unless by some sheer miracle we pump another $4k before June opens, the monthly close isn’t looking great. That said, we have now printed 9 consecutive red weeks and continue to fail to move below $29k with any conviction, and thus some relief is likely due, and as mentioned last week I continue to look towards the $34-37k region as the next macro lower-high before continuation lower into the 200wMA.
If we look at the daily, that $31.3k level is still capping price, and there is the possibility that this relief into June open is capped by that level, where, if we see a swing-failure into $31.4k and subsequent breakdown later this week, I think we just continue to chop above $29k for a little longer. However, a daily close through that level and we can start looking at playing this relief higher, first into $33k, followed by $34,050 and finally the 50% retracement at $36.7k if it can squeeze that high, where I would expect prior range support to turn resistance, particularly below that trendline. Again, whilst we hold above $29k I think that upside is more likely to follow short-term, where we continue to fail to close the daily below that level. As such, if and when that does occur, I think the next leg lower begins into $22k.
Price: $1,905.44 (0.06211 BTC)
Market Cap: $230.519bn
Thoughts: Looking firstly at ETH/USD, we can see on the weekly that price is still somehow holding above that $1700 level, having wicked into it five times since May last year, each failing to break below it but with last week’s weekly close as close to doing so as it has done during that past year of price-action. ETH looks weak here, with momentum continuing to point to a strong downtrend. That said, if BTC sees some relief, no doubt ETH will too, which sets up a high conviction short for me with that $1700 level as the target if we can squeeze higher from here, as I really doubt that we see no liquidity grab below such a pivotal level before a longer-term bottom is found. Regarding targets below $1700, if we do see price break down below it I would expect to see prior all-time highs at $1415 retested followed by the 200wMA just below it around $1200, which is the range in which I would like to start scaling into spot ETH. Further, if we see absolute decimation across markets, the ideal area for me to load up heavily would be between $740-$832, but I don’t know how likely it is that we’ll be gifted that. If we drop into the daily, we can see some bullish divergence here, confirming the likelihood of some relief, but price is now pushing up into prior support around $1910 and trendline resistance, so I would not be looking to jump on board here for further relief. Instead, if price can get back above $2k, I’d look for long setups on the lower timeframes for a run at $2160, and if that level gives way then the 38.2% retracement at $2420.
Turning to ETH/BTC, this is where the picture has shifted somewhat dramatically following last week’s close, with the pair losing the trendline support from the May 2021 lows and immediately selling off back into 0.06, as anticipated. That level held as an equal low, but market structure on the weekly is now bearish with lower-highs and lower-lows. I would expect 0.065 to now act as resistance and price to move all the way back into long-term range support at 0.054, which is now the most important level on this chart and where I would expect some demand to step in. If that level gives way, I think we see ETH/BTC return to the 200wMA and 2020 highs around 0.04 to 0.042.
Price: $318.55 (0.01039 BTC)
Market Cap: $52.027bn
Thoughts: Beginning with BNB/USD, we can see that price continues to consolidate in a very tight range right around $317 but firmly below trendline resistance, as well as below prior support at $337. If the market does see relief, I would expect BNB gets a push back towards that trendline resistance, with $357-371 looking like a nice spot for those with longs to cover exposure or for those looking to short to look for an entry. Whilst we did see strong demand on the capitulation wick, I do not expect BNB to survive if BTC and ETH break through $29k and $1700 respectively, instead expecting that wick to get filled in back towards major support at $210, followed by a retest of the 200wMA at $151 over the coming weeks and months, which is where I would like to fill my bags for the next cycle (or at least begin to). Unless, as I have said, the pair can climb back above the mid-range and previous lower-high at $458, and thus break trendline resistance also, I think any relief will be short-lived.
Looking at BNB/BTC, we are grinding higher but the price action remains very choppy, and whilst last week saw price wick above reclaimed resistance around 0.0102 into resistance at 0.0113, the pair ultimately closed back below that former level and there is no real momentum in either direction here at present. If we look at the daily, we’re just chopping around the 200dMA and 360dMA, with price wicking both above and below that. At present, daily structure is bullish above the 200dMA, but if 0.0113 continues to cap price we are just going to see a retracement of this move higher back into that 0.009 area. No conviction either way here, but if the market pukes, I think this pair moves lower with it.
Price: $46.80 (0.00153 BTC)
Market Cap: $15.891bn
Thoughts: Beginning with SOL/USD, again like the rest of the market the pair held above the capitulation low at $35.74 but printed a lower weekly close for the eighth consecutive week, also holding below prior resistance at $53.60. Momentum indicators continue to point to weakness, but if we can get a push above that $54 area, I think it is likely we see SOL continue higher back into the $75 level to retest that prior support as resistance and likely print a lower-high before continuation to downside. However, if price is rejected by reclaimed resistance between $54 and $62, I would look towards the lower timeframes for a close and breakdown back below $54 after pushing above it and look for fresh shorts, firstly into $35 and secondly into $24, which has been my primary target to radically increase long exposure for several months now. Down into that $19-24 range we are sitting on a similar drawdown to ETH in the previous cycle and I think spot exposure makes a lot of sense down there. Whether we then see lower prices from there or not I have no idea, but if the weekly closes below $19, the next major support is down at $11.60, followed by $5, which would imply utter chaos in the markets but in these less accommodating macro conditions, who knows. Either way, I am looking to begin building a SOL bag down at $25 and DCA in from there, not looking for any further shorts once we reach it. The alternative is that $25 is front-run and that this capitulation into $35 was indeed a bottom, but in that case we would need to see price reclaim $62 on the weekly and then consolidate above it for an extended period.
Turning to SOL/BTC, we are still holding above prior resistance turned support at 0.00137, which is promising for that relief rally, and I would be looking at 0.002 as the next major resistance if we do push off from here. If we look at the daily for greater clarity, there is some bullish divergence into this key level supporting that thesis but daily structure remains bearish below that 0.0019 lower-high, which is why I would expect 0.002 to act as strong resistance if we get that retest. In terms of a bottom for the BTC pair, this could already be it, but again we’d need to see a longer-term range begin to form before that can be determined. Level to level, if 0.00137 gives way, there is some support at prior resistance around 0.001 but ultimately major support is down at 70k satoshis.
Price: $10.30 (33,580 satoshis)
Market Cap: $2.951bn
Thoughts: If we look firstly at ATOM/USD, on the weekly we can see that price closed the week below prior resistance turned support at $10.50, above which it had been marginally holding for the past couple of weeks, indicating weakness here. That said, we are above a key pivot in its price-history between $7.77 and $9 and so relief from here is more likely, where if we do see a sustained push I would be looking at prior support at $14.66 to provide significant resistance, and that is where I would look for fresh shorts if the setups present themselves. Other than that, we would either need to wick below $7.77 and then start to base out above it – much like the previous bottom – in order for me to consider long exposure, or to break and close below that support and continue lower towards the $3.25 level to really hammer the spot bids, which I am aware is still a long way away and by no means a guarantee. If you were inclined to play this long without awaiting a longer consolidation, I would be looking at that $12.40 level on the daily, where any close above it turns daily structure bullish and you could then expect another 15-20% pump up towards that zone between $14.70 and $16.30. The ultimate short would be if this could squeeze all the way back to $20 but I doubt it.
Turning to ATOM/BTC, that trendline resistance from the 2021 high is still capping price and I would expect any relief rally to once again be capped by both that trendline and prior support turned resistance at 43-47k satoshis. If we were to see a break and close back above that huge cluster of support turned resistance, things look quite different, but until that happens I think bounces are for shorting and we are more than likely to make another leg lower into major support at 26k satoshis before finding any meaningful bottom here. The real carnage would occur on a weekly close below that level, as there is literally no support all the way back into 18k satoshis, which in turn is the only level holding ATOM above all-time lows at 14.5k, so 26k really is make or break and thus there is a case to be made for taking long exposure down there with a very tight invalidation on a close below that level, as risk/reward is high and invalidation is clear.
Price: $102.80 (0.00335 BTC)
Market Cap: $1.424bn
Thoughts: Beginning with AAVE/USD we can see that the pair closed below its 200wMA a few weeks ago at $110, wicking below resistance turned support at $90 all the way into $61 before closing right back at that $90 area. Since, it has consolidated above $90 but continues to find it a struggle to break back above the 200wMA and prior support at $110. If AAVE can break back above it, I think there is a nice range to play between there and the next major resistance at $167 and I would be looking for long setups in that event to then cover and look for fresh shorts up near $167. If we look at the daily, this would coincide with a 200dMA retest from below, which has been capping price since last October.
Turning to AAVE/BTC, we are sitting right on the 200wMA as opposed to below it, also finding support above historical resistance between 0.00225 and 0.00285, which is actually a nice spot to expect some relief given how key this zone has been historically. That said, I think any relief gets capped at that prior support turned resistance level around 0.0055. Looking ahead, however, I would want to see price really flatten out above 0.00225 and begin a new range to begin considering a cyclical bottom to be in here. Momentum indicators, unlike on other large-caps, are actually pointing to some exhaustion into this critical support, with bullish divergence apparent. As such, if we look at the daily, there is a case for playing this long if we get another dip into 0.00285 retesting that support, with invalidation at 0.00225 and a target of 0.0054.
Price: $14.86 (48,450 satoshis)
Market Cap: $496.217mn
Thoughts: Given that Arweave has only been trading for about a year, both the Dollar and BTC pairs look identical, and so I will focus on the Dollar pair price-action here.
Looking at AR/USD, we can see that price had its first bull cycle off the all-time low at $7 in late July, rallying into an all-time high at $93 in November 2021 and then breaking back below reclaimed resistance at $71.60, which became the complacency top. Following this, the pair has continued to bleed lower and a couple of weeks ago capitulated below reclaimed support at $13.30 into $9.95 but ultimately closed back above $13.30, above which it continues to hold, but with daily structure still bearish. For now, the pair is range-bound between that support and reclaimed resistance at $19.77. Whilst I do think we are approaching the latter stages of Arweave’s first bear cycle, I think there is still quite some time to go before we have bottomed and volatility remains high at present. I would expect to see any relief capped by $23 and price then continue lower back towards the support that marked out the previous bottom above the all-time high. If price then flattens out around $8-10 and volatility diminishes, I would look to begin DCA’ing into a position around those levels for the next cycle. If, however, price breaks below that support range, there is only bearish price discovery below and I would want to wait to see how that plays out. It may be the case that we break below $7.77 and then immediately reclaim it, then forming a new accumulation range, or it may be that there is still plenty of bleeding to go even below that low. In that scenario, it is wise to just wait for a bottom to form and try to identify those classical bottoming structures that take many weeks if not months to play out before getting involved.
Ethereum Name Service:
Price: $11.77 (38,400 satoshis)
Market Cap: $239.519mn
Thoughts: ENS has been trading for an even shorter period than Arweave and thus has only really known a bear market since inception in November 2021.
If we look at ENS/USD, it managed to hold above support at $41 for many weeks before ultimately breaking below it and bleeding lower into new support at $11.85 in February, which marked a short-term bottom from which price rallied all the way back into $28.80 and rejected, despite the beginnings of a series of higher-highs and lows forming. That led to a sharp reversal and breakdown below $11 into the current all-time low at $7.18, where price has since pushed a little higher, formed a higher-low at $9.50 and is now contesting $11.85 once again as prior support turned resistance, with $14.55 the next level of significance overhead. If price can now break and close above $14.55, we have a return to bullish market structure following capitulation below a prior all-time low, and thus this begins to look attractive. In that event, I would look to buy dips for a retest of the 200dMA and reclaimed resistance around $24-25, and only if that gave way would we be on for a full blown bull cycle. Alternatively, this relief is short-lived like the rest of the market and if $14.55 is rejected (or even way up at $24 we print a macro lower-high), we could expect the all-time low to once again be taken out and price to continue lower. If we do see that occur, I will adopt the same approach as for Arweave and simply wait for the chart to begin printing a bottom of sorts before entry, as even though we have drawn down nearly 96% from the all-time high, there is no reason why another 90% drawdown cannot occur in the depths of a bear market. Either way, ENS is something I want to own moving forward so I am keeping a keen eye on it.
Price: $0.166 (542 satoshis)
Market Cap: $175.139mn
Thoughts: Finally, we can look at WOO Network, where if we begin with WOO/USD, we can see on the weekly that the long-term range support at $0.30 gave way a couple of weeks ago, with price closing below it into a swing-low at $0.15, above which it is just about holding for now. This is in the middle of no man’s land and whilst we may see relief back into that range support to retest it as resistance, I am fully expect further downside into major support – and the range that preceded the bull cycle – down at $0.045, around which I think I will be looking at averaging into a longer-term position, with an invalidation on a close below the all-time low at $0.02. Even if we drop into the daily, there is basically no support here all the way back towards $0.07, which is still another 55-60% lower from here. Whilst this looks bleak at present, I think there is a good opportunity for a cyclical position if and when we do return to that original range.
Looking at the BTC pair, we are much closer to support than on the dollar pair, having lost range support at 964 satoshis and continued lower into support at 444, above which we are hanging for now. If that level gives way, I think we see the full retracement into that original range resistance at 260 satoshis, with that then being the only level holding this above the all-time low around 50 satoshis, which is a huge range. If we drop into the daily, we can see how poor structure has been with each support becoming resistance despite minor rallies, and I would be looking for this pattern to end as we come into that original range and then price to flatten out a little and consolidate. If we see that above the all-time low, I am in, but this could be many weeks yet before those levels come into play.
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 email@example.com.