Market Outlook #178 (6th June 2022)
Hello, and welcome to the 178th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Avalanche, Chainlink, Fantom, Immutable X, LooksRare and Travala.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Market Cap: $595.588bn
Thoughts: Beginning with the monthly for BTC/USD, we can see that May saw the highest volume traded in the past year, since the previous bottom formation in 2021. That being said – and despite printing a monthly swing failure of the $29k range support – the pair did print the lowest close in over a year, closing firmly below $35k. As such, we have some mixed signals here. Clearly there is demand at the $29k level and price continues to find support above it, but structure here is looking quite poor. Whilst June may broadly be a month of relief after last month’s bloodshed, I don’t look at this at think we’ve bottomed just yet. Looking ahead, I would expect to see any bounce towards $36.7k faded and price return lower, at least to retest $29k and if that level gives way then to move lower towards the prior cycle highs, above which I think there will be significant demand around $22k, which is the 200wMA.
Turning to the weekly, we can see this more clearly, with the 200wMA currently sitting around $22,300 – and this is historically the MA that marks out cycle bottoms. Now, as I have mentioned before, we are in a different macroeconomic environment than any time in recent history and thus the expectations that this bear market plays out like previous ones is not necessarily correct. If that 200wMA gives way, it’ll be carnage, but that is certainly where serious opportunity would occur if it were to happen. Assuming we don’t get total obliteration of asset prices across markets, I would be looking for that zone below $25k and above the 200wMA as a prime entry. Looking at last week’s price-action, we saw price wick higher towards prior support at $32.9k but find resistance and close back towards $30k, but this morning has seen price rally off the open, which isn’t necessarily bullish at all – rather, bulls would want to see price make a weekly low early on in the week and then see a rally towards the back end of the week into the close. Instead, we have $29.8k as an untouched low and price pushing back towards resistance. If we wick above last week’s high into $32.9k and break down on lower timeframes, I will be looking to short back into $29k. However, if we don’t break down and this rally is legit, I would want to see a weekly close back above $34k to start looking at longs for next week back towards the 50% retracement and prior support at $36.7k, where I would expect more sell pressure to come in.
Turning now to the daily, we can see that momentum is turning bullish but we are still range-bound between $29k as support and $31.3k as resistance. Start closing the daily back above that and I think we squeeze for last week’s high into that prior support at $32.9k, where the reaction will be telling. Reject up there and break back below $31.3k and I think we can look for an aggressive short back below the weekly open into $29k. For the bullish scenario, any daily close back above $32.9k and subsequent flip of $31.3k as support and a higher-low would turn market structure bullish and I would expect that gap to get filled in back up to $36.7k.
Price: $1887.40 (0.06043 BTC)
Market Cap: $228.593bn
Thoughts: Beginning with ETH/USD, we can see that last week was an inside week, with price consolidating above $1700 support once again but finding resistance at $2034. ETH continues to look much worse than BTC here, with momentum indicators and structure still pointing towards downside. If BTC gets a relief rally though, no doubt ETH follows but at a slower pace, and I would expect to see that $2034 level flipped as support and price squeeze up into prior support turned resistance around $2425, where I would be looking for any short setup I can find back into $1700. Ultimately I am expecting the $1700 level to get blown out before a bottom is found, as it is looking very comfortable at present, and the 200wMA at $1200 looks appealing for increasing spot exposure. Dropping into the daily, there is still minor trendline resistance capping price and structure is still bearish here, but a break and close above $2040 changes that and we could then look for a higher-low to form and price to squeeze back into that 38.2% retracement at $2420.
Turning to ETH/BTC, the picture didn’t get any prettier last week but we may have found a temporary bottom, as price broke and closed below the prior week’s low into support at 0.0594. If it can hold here, we may see a retest of 0.064 as resistance, but to be honest I think any rally will be short-lived as we see – broadly speaking – alts crushed on their BTC pairs as BTC moves in either direction. Over the next few weeks, I am expecting to see the pair trade lower again into that major support at the May low ~0.054, which is where we may well start to bottom out, at least short-term, where any long setups that begin to form in that area would open up a potentially rally back towards mid-range at 0.0687. Break and close below 0.054 over the coming weeks and I think we return to the 200wMA and prior resistance turned support between 0.04 and 0.042.
Price: $0.635 (2035 satoshis)
Market Cap: $21.6bn
Thoughts: Looking firstly at ADA/USD, we can see from the weekly that price rallied off the open last week and wicked towards prior support turned resistance at $0.75 but fell shy, then rejecting and closing back towards the 200wMA at $0.55. This marks out a nice swing-low at key support, however, with the AO printing some divergence now on this most recent move lower, pointing to some relief. Now, if we can break and close back above $0.75, I think we squeeze all the way back towards the original breakdown area at $0.89, which is also confluent with trendline resistance, so any move into that area is getting shorted with my invalidation at $1.25 and my first target at the 200wMA, followed by a second target at $0.40 and a third at $0.20. Looking at the daily, we can see that structure is starting to turn bullish here and if we can close today firmly above $0.62, I think that break beyond $0.75 is on the cards and we could look to play that higher into the $0.89 area, as mentioned. What I would be looking for in that case is a retest of $0.62 as support after pushing up into $0.75, with invalidation at $0.54.
Turning to ADA/BTC, again we are sitting right on significant historical support and so some relief is to be expected here, with last week bouncing off the 200wMA right into reclaimed resistance at 2000 satoshis, but this week has seen price start to move beyond that level, wit trendline resistance from the all-time high not too far away. A weekly close above that would be impressive and I would start to consider longer-term relief to be in play if that does occur, where we could then look to buy 2000 satoshis as reclaimed support likely next month. However, whilst both trendline resistance and the prior lower-highs around 2530 are capping price, I think any relief will be short-lived and I will stick to my short bias. On the daily, the 200dMA is also right around that trendline, adding confluence to the importance of that resistance cluster being flipped for any meaningful rally to occur.
Price: $27.24 (87,070 satoshis)
Market Cap: $7.652bn
Thoughts: Beginning with AVAX/USD, from the weekly, we can see that price has been decimated since March, selling off for 9 consecutive weeks from resistance at $98 down into support at $21.50, above which it held last week, printing an inside week. If price can now push off and close above last week’s high and prior support at $30.60 this week, I will be looking for longs next week back towards reclaimed resistance at $40. If, however, we wick into $30.60 and close back below last week’s high, I will be looking for shorts back to $21.50 and likely below into $18 as the next support.
Turning to AVAX/BTC, the picture is largely the same here, with price having broken back below key resistance at 0.00115 and selling off into reclaimed support right around 82-87k satoshis, with support also just below at 72k, towards which price has wicked over the past couple of weeks. That said, we are holding that 82k level for now, and, if we look at the daily, if price can close back above 90k satoshis, structure turns bullish off key support and we can expect further relief towards that 0.00115 area to be retested as resistance. If we start to break down, however, I am looking at a close below 72k satoshis to open up significant more downside into the major support level down at 42k.
Price: $7.93 (25,360 satoshis)
Market Cap: $3.702bn
Thoughts: Beginning with LINK/USD, we can see from the weekly that momentum indicators are still pointing to downside, with no shift in momentum just yet, but price is now holding above support at $7.25, and last week closed marginally back above it, printing a swing-low. If the market sees some relief, no doubt LINK will follow but likely as a weaker performer given how this is looking at present. That said, we could see price push up this week into prior support turned resistance at $9, which, if it gives way, opens up a nice range between there and a 200wMA retest as resistance at $11, which also happens to be prior support yet untested, so I will definitely be looking for longs within that range if it opens up. If $9 caps price, however, I would expect to see another leg lower into that range resistance at $4.85.
Turning to LINK/BTC, we are sort of sitting at a nothing level, where minor support had been found in December 2019 around 24k satoshis, but the next major resistance is back up near 33k and the next major support is down at 16k satoshis, so this is not the most appealing area for setups to form. Considering a longer-term position, I would not be looking to touch spot LINK until we see that 16k level traded at the very least, if not the major historical pivot around 10-12k satoshis, where I would expect to see a cyclical bottom begin to form. Looking at the daily, we can see that any squeeze back into 33k satoshis would present a nice short setup, with lots of prior support around that area as well as a 200dMA retest.
Price: $0.38 (1219 satoshis)
Market Cap: $969.242bn
Thoughts: Beginning with FTM/USD, we can see from the weekly that price has sold off into support from the prior accumulation range around $0.29, above which it has consolidated for a couple of weeks, although price did print another lower-high off the $0.57 support turned resistance a couple of weeks ago and close last week down at $0.35. Momentum continues to point lower here, but again, much like LINK, if the market turns higher for a period, expect Fantom to follow, and I would be looking at a trendline resistance retest potentially on the cards in that scenario, if we can see a weekly close above $0.57. If that level continues to cap price even as the wider market is seeing relief, we have clear weakness that can be exploited and look for fresh shorts around that level for another leg lower into $0.18. If that level fails to hold price over the coming weeks, it is a long way down to the next major support zone between $0.046 and $0.059 as prior resistance.
Turning to FTM/BTC, sharp trendline resistance from the all-time high continues to cap price, as does prior resistance at 1740, which formed another lower-high on the retest. We are sitting in no man’s land here to be honest, and I would fully expect to see another leg lower to follow, taking price below the 900-satoshi swing-low, towards the historical resistance turned support zone between 440-570 satoshis, within which, if we start to see a new range begin to form, I would then consider a bottom more likely to be in, where diminishing volatility and large buyers accumulating at those prices would tempt me to also begin a cyclical position in Fantom as close to 440 as I can get it. No doubt you know the score if we see a weekly close below 440 – exit any position as the next major support is down at 87. For bulls, if the pair can reclaim 1900 satoshis as support, things start to look quite different, and I would then look to play a further squeeze towards 2600 satoshis as untested support.
Price: $1.06 (3372 satoshis)
Market Cap: $248.335mn
Thoughts: As IMX has only been trading since January, there is very little available price-history and both pairs look identical, so I will focus here on the USD pair, as there is cleaner structure.
What we see on IMX/USD is a persistent down-trend since inception, with prior all-time lows at $1.10 getting taken out at the beginning of May with capitulation into a new low at $0.64, where price has since been making higher-lows and higher-highs back into the $1.10 area as support turned resistance. not too dissimilarly to the rally off $1.10 back in March. If $1.10 gets flipped, I think we see price squeeze up towards $1.44, or even as high as $1.85, but I do expect a macro lower-high to form once again in this downtrend and for price to turn lower from up there. If we do close above last week’s high and reclaim $1.10 here, you could look to play that long towards $1.44 with invalidation at the prior swing-low ~$0.90, but I don’t feel too confident taking that setup, personally. I would rather look to short from higher up for another leg lower. Given the low float and thus huge FDV on this, I would also not be keen on a long-term spot position unless we see serious capitulation below $0.64 – I’m talking as close to the IEO and private raise prices as possible, which were at $0.10-$0.16. Get within 50% of that and start to see price flatten out and I will take another look.
Price: $0.398 (1271 satoshis)
Market Cap: $180.411mn
Thoughts: Again, much like IMX, LOOKS has only been trading since January and so I will focus again on the Dollar pair.
LOOKS/USD has been in a downtrend since inception, marking out an all-time high at $7 and bleeding out into $0.84 in late February. That level gave way at the beginning of May and price has since been bleeding lower and lower, with price making new all-time lows yesterday at $0.36. There are no signs as of yet of an end to this bearish price discovery except some minor RSI divergence that I’m not really paying attention to. Support continues to become resistance and whilst that trend remains I think we move lower towards the 1.618 extension of this trend down at $0.28. Now, given the fundamentals of LOOKS and the fact that – even in this depressed market – it continues to take ~$140k+ a day in fees, we’re looking at $50mn in annual revenue distributed to stakeholders, which puts LOOKS at a ~7.5x earnings multiple for its FDV of $390mn. Further, LOOKS is now down 95% from the all-time high. Given the above, I am now beginning to accumulate LOOKS – albeit very slowly – and I will look to dollar cost average in from here until we find a bottom, then looking to stake my position and earn on it.
Price: $0.71 (2285 satoshis)
Market Cap: $36.582mn
Thoughts: Beginning with AVA/USD, from the weekly we can see that price has been in a bear market since the April 2021 all-time high at $6.66, drawing down 92% since then, with the most recent move lower sending price below support at $0.96 and closing below the 200wMA, right down into minor support around $0.56. There are no signs yet of any shift in trend and whilst I do expect $0.96 to be retested from below as resistance, I think we see a lower-high from around the 200wMA and price then continue lower towards stronger support around $0.34-$0.38. where a bottom is more likely to form. If that zone gives way, it looks like a return to the original accumulation zone between $0.066 and $0.17 which preceded the entire bull market, and if we do get that opportunity I will be looking to start a position within it.
Turning to AVA/BTC, we can see that price has reclaimed major resistance at 4400 satoshis, broken below the 200wMA, retested it as resistance and moved lower once again, now sitting at support around 2220 satoshis. If this level gives way, we do have some support right around 1800 which may hold but ultimately the major support level is back down near 1100 satoshis, which is another 50% retracement from here, so I am not keen to make any longer-term movements on Travala 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 firstname.lastname@example.org.