Market Outlook #182 (11th July 2022)
Hello, and welcome to the 182nd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Cardano, Chainlink, Algorand, Synthetix, Oasis Network and dYdX.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $20,448
Market Cap: $390.377bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price wicked above the prior weekly high, through resistance around $21,900 into the 200wMA at ~$22,500 and rejected, closing down at $20,850. Whilst this rejection just reaffirms that the 200wMA is strong resistance at present, it just reaffirms that, following a major capitulation event, we are now range-bound, with that 200wMA acting as range resistance, and range support coming in around $19k at present. If we are able to form a higher-low this week above that $19k level and start pushing back up above $21.9k, I think it becomes more likely that we see that 200wMA reclaim and price then push higher to fill part of the gap into $25.4k, as untested prior support. However, whilst that $21.9k-22.5k zone is acting as resistance, it is likely to be chop city for a little while longer. The bearish scenario here becomes apparent if we close the weekly below that $19k range support, at which point it looks inevitable to me that the $17.6k low gets taken out and we either print a swing-failure into that low if there is demand, or we make another leg lower towards major support around $14k.
Turning to the daily, I have marked out the two short term trajectories outside of just continuing to chop between support and resistance this week, where if we close the daily up above $21.9k I would like to take a look at long setups for a squeeze into $25k, and conversely if lose the prior all-time high at $19.8k once again, I want to see that retested from below as reclaimed resistance, price break lower and close below $19k and then look for shorts into $17.6k, followed by $16.1k. Very straightforward with this structure.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1146.17 (0.05592 BTC)
Market Cap: $139.005bn
Thoughts: If we begin by looking at ETH/USD, from the weekly we can see a similar pattern to BTC/USD, with price rejecting the 200wMA reclaim, having wicked above it into resistance at $1290 and then closed back below it around $1214. As such, the same applies as marked out above: if we see price hold above that higher-low at $995 this week and mark out another higher-low, we’re printing some sort of ascending triangle into that $1290 resistance and it becomes more probable that we see a 200wMA reclaim, followed by a squeeze into untested prior cycle highs at $1416 as resistance, where if that levels gives way (big if, to be honest) then we will see another 20% rally into the big $1700 level that preceded this collapse. If, however, price breaks through $995 and closes the weekly below, I think we take out the $880 swing-low into that support zone above the 2021 open at $737. That range between $737 and $830 should provide some demand, where we could see a wick into demand followed by a swing-failure of $880 to mark out the beginnings of a mid-term bottom. If, however, we close below $880 and the 2021 open fails to provide sufficient demand, there is literally no support below it back into $550. Turning to the daily, as we can see, that range resistance at $1290 is capping price nicely but we do have that higher-low formation which is starting to print that ascending triangle pattern – that is why that $995 level is now key, as if that level breaks we return to bearish market structure and this has all just been consolidation prior to another leg lower.
Turning to ETH/BTC, we are still just consolidating right around the May lows having broken below that major range support and reclaimed it a few weeks ago, with minor support at 0.0594 now acting as resistance. Break and close above that level and things start to look more bullish, and we could see the pair squeeze back towards that mid-range at 0.0687. If, however, 0.0594 continues to cap price and we break back below 0.054, I think the reclaim of range support has failed and we make our way down towards the 200wMA at 0.042 over the coming months. If we look at the daily, we can see that price is sitting right on local trendline support at present just above that May low, so there is plenty of confluence for support here – if it fails and we close the daily below 0.0536, I think the momentum has been lost and structure returns to bearish, hence the likelihood of 0.0462 followed by 0.042.
XRP:
XRP/USD
Weekly:
Daily:
XRP/BTC
Weekly:
Daily:
Price: $0.325 (1587 satoshis)
Market Cap: $15.625bn
Thoughts: Beginning with XRP/USD, we can see from the weekly that price continues to present bearish market structure with support around the 360wMA becoming resistance as price broke lower a couple of weeks ago, with the pair now consolidating right around prior resistance at $0.33. We saw price wick briefly below it but we are now in a consolidating range with $0.33 acting as that support and the 360wMA acting as range resistance at $0.38. If we start to flatten out right around here, I think it becomes more likely that we are seeing a bottom formation, but for now structure is still bearish on the weekly and any close below $0.29 and I think we drop into that $0.24 level. Looking at the daily, prior support at $0.37 turned resistance a couple of weeks ago and continues to cap price, so bulls want to see that level reclaimed as support as the first sign of a reversal, where a close back above $0.40 turns market structure bullish and you could look to buy a dip expecting a squeeze into the next resistance level at $0.51. For shorts, waiting for a daily close below $0.29 and then looking to play that range into $0.24 makes sense to me.
Turning to XRP/BTC, I have marked out the general trend since April 2021 and as we can see, nothing has changed with the bounce off support as 1250 satoshis – at least not as of yet. For now, structure on the weekly is still bearish, with the wick into resistance at 1900 satoshis currently acting as a lower-high, with price now moving back below support turned resistance at 1650. If that 1650 level acts as resistance again this week, no doubt we return to 1380 to retest that level as support, and if it holds and price begins to consolidate above it, then we can discuss a bottom formation, but for now the trend is pointing lower and I would be looking for confluence across pairs to short if that 1250 level gives way, because there is very little major support all the way into the full rally unwind at 730 satoshis. If we drop into the daily, we can see that the 200dMA and 360dMA continue to cap price, so for anyone expecting a sustained reversal, it is likely wise to wait until those MAs begin to support price again as opposed to cap it.
Cardano:
ADA/USD
Weekly:
Daily:
ADA/BTC
Weekly:
Daily:
Price: $0.45 (2215 satoshis)
Market Cap: $15.391bn
Thoughts: If we begin by looking at ADA/USD, we can see on the weekly that price has begun to flatten out somewhat right around that $0.42 level, with the 200wMA now acting as resistance and weekly ranges beginning to tighten up. Whether that contraction of the range is going to precede expansion to the downside or evolve into a longer-term re-accumulation range, I don’t know as of yet, but if we break and close below $0.42, the answer is obvious, with the next major support down at $0.17-0.20 following that breakdown, where I would look for shorts again within that range. If instead we continue to hold above $0.42 and price remains flat and boring as it is at present over the coming weeks, we may well be bottoming out and we could either look to buy that range with a clear invalidation on a close below $0.42, or wait for weekly structure to turn bullish subsequently before buying, which would in all likelihood be months away still.
Turning to ADA/BTC, we did see a strong bounce off the 200wMA over the past few weeks, leading to a somewhat weak breakout above trendline resistance, with price still capped by reclaimed resistance at 2530 satoshis and thus still looking like a lower-high below 2717. If this is a fake-out above the trendline into resistance, we should see price break back below the trendline sharpish and move back into that 200wMA at 1675 satoshis. If it is a legitimate breakout, we should see 2530 reclaimed as support, and when we close above 2717 we have weekly structure turning bullish of a major support level, which is something we’d want to be buying. Given how the rest of the market continues to look, I’d be surprised if we see ADA become an outlier and begin some major reversal right now, but it’s something to be wary of based on this structure. If we do break lower, the two trajectories are similar to the BTC pair, where any protracted consolidated above that 200wMA starts to look like a re-accumulation range with a very clean invalidation level, and any break and close below 1500 satoshis opens up significant downside, with only minor support at 1125 satoshis, followed by better support at 950 and major support around 710 satoshis. That is a *lot* of potential downside if the 200wMA gives way, so again something to be aware of.
Chainlink:
LINK/USD
Weekly:
Daily:
LINK/BTC
Weekly:
Daily:
Price: $6.30 (30,710 satoshis)
Market Cap: $2.94bn
Thoughts: Beginning with LINK/USD, we can see from the weekly that price continues to show bearish weekly structure but is at present holding above support at $5.30, with a lower-high forming at $7.26 a couple of weeks ago. If we see this lower-high lead to another push into that $5.30 area, I do not expect it to survive a third test, and we are likely to wick at least 10% lower into prior range resistance at $4.85, where, if that level gives way, there is no support until $3.40. Break below that and the next major level of support is down at $1.56, so we can see how pivotal this $4.85-$5.30 zone is at present. If price begins to flatten out here above support, we can – much like the other large-caps – begin thinking about a bottom and how we might allocate, with a very clean invalidation on a weekly close below $4.85. At present, neither momentum indicator on the weekly is suggesting a bottom is in. If we drop into the daily, we can see that, though choppy, structure is bearish with the push higher into $9 swiftly rejected, leading to a resistance reclaim at $7.25 which continues to cap price, with minor support currently holding around $6.16. Lose this level this week and I think we retest that support zone below, where the reaction will be critical.
Turning to LINK/BTC, we have pushed off minor support at 22k satoshis right into prior support turned resistance at 33k, where price rejected a couple of weeks ago and is now dropping off, looking like a lower-high has formed and that the trend is now to continue to the downside. If, despite this, bulls are able to step in early here, forming a higher-low and then breaking through that major resistance cluster around 33k, we would want to first see consolidation above that level as reclaimed support and then buy a trendline/200wMA breakout and ride it higher. That is the least probable scenario in my mind. More probable is that this lower-high leads to a retest of 22k satoshis as support, where price may then flatten out if the bottom is in a form a new range over the coming weeks and months, or price continues the downtrend. In that latter scenario, we want to see a weekly lose below 22k satoshis, which will open up downside firstly into 16k satoshis and then likely into the major support cluster at prior resistance ~10k satoshis, where – if we get it – I would be keen to build a long-term position.
Algorand:
ALGO/USD
Weekly:
Daily:
ALGO/BTC
Weekly:
Daily:
Price: $0.30 (1480 satoshis)
Market Cap: $2.116bn
Thoughts: Beginning with ALGO/USD, we can see on the weekly that we are currently sitting on a 90% drawdown from the 2021 highs, with price capped by trendline resistance but beginning to flatten out above historical support at $0.30, with weekly ranges contracting around here over the past few weeks. If this range contraction lead to a breakdown and close below $0.30, I think we see another leg lower follow all the way into major historical support at $0.16, which would be a 94.5% drawdown from the high, with it being the support level that preceded the entire bull market, except for the Covid crash that brought an all-time low into $0.093 but was swiftly reclaimed. If we do get down there, I will be keen to get involved, with invalidation on new all-time lows and looking to hold for 18 months in all likelihood. If we look at the daily, we can see how structure is still bearish at present, with prior support at $0.34 acting as resistance. If we close the daily below $0.29 here, I think we begin that descent lower and continue in the same manner we have been towards $0.16; if, however, price starts to flatten out here and hold above support, I would want to see that range last through Q3 and then look to buy a structural shift above $0.34, with invalidation then being a close below the support into $0.26-0.27.
Turning to ALGO/BTC, we can see that despite the bounce from 1190 into support turned resistance at 1560 satoshis, price continues to print bearish weekly structure with the trend pointing lower, and if this lower-high sticks, I would expect to see price return towards support at 1075 satoshis over the next couple of weeks, which is the final major support above the all-time high at 700. As such, if we do start to flatten out (can you sense a prevailing theme here?) above that key level, that would be prime for buying in my opinion, because the invalidation is a new all-time low and we’d be consolidating on historical support. Nothing much else to add here.
Synthetix:
SNX/USD
Weekly:
Daily:
SNX/BTC
Weekly:
Daily:
Price: $2.35 (11,490 satoshis)
Market Cap: $269.956mn
Thoughts: Looking firstly at SNX/USD, we can see from the weekly that the pair has experienced a 95% drawdown since the March 2021 all-time high, with price continuing to print weekly bearish structure, with the rally from two weeks ago into prior support turned resistance at $3.54 rejecting and the pair now moving back below support at $2.54. From here, it is likely we return to retest the swing-low at prior resistance turned support ~$1.59, where, if the pair can hold above and begin to form a range, it will begin to look like a bottom formation, particularly in the context of SNX having topped out quite so early in the cycle. I would then be looking to DCA into a position as close to $1.59 as possible and cut on a weekly close below it, with the next major level of support down at $0.77, which implies a 97% drawdown from the all-time high and would be a very opportune entry if we get it. Momentum indicators on the weekly are also beginning to show declining momentum on the moves lower, which is important.
Turning to SNX/BTC, we can see that price is now largely range-bound between the 200wMA as resistance and support at prior resistance ~9.7k satoshis. This range has now been in play for about 224 days, with some price-action occurring above and below the range but the pair largely staying within it during that time. WE also saw a lot of spot volume come in over the past couple of weeks, suggesting potential re-accumulation within this range. As such, we want to see that range support continue to be protected and can look to allocate as close to it as possible, with invalidation on a close below 8k satoshis, where we would then look to cut and re-allocate on a 9.7k reclaim or down at the original accumulation area around 4-6k satoshis. On the daily the 360dMA is still capping price but both it and the 200dMA are finally starting to flatten out too, so if we continue to see this range hold and both price and key MAs flatten out with it, that’s what I want to be buying. Boring is good.
Oasis Network:
ROSE/USD
Daily:
ROSE/BTC
Daily:
Price: $0.049 (240 satoshis)
Market Cap: $247.187mn
Thoughts: If we look firstly at ROSE/USD, we can see that it has experienced a 92% drawdown from the all-time high and has now returned to the original accumulation range that preceded its bull cycle, with price now very much tightly consolidating above the all-time lows at $0.029. If we continue to see this price-action, this is what I want to be buying, with invalidation on new lows and re-allocation on a reclaim. If this is a re-accumulation range, it is likely we will see this dampened volatility for many many weeks before any signs of reversal, so there is no need to rush. But this does indeed look promising.
Turning to ROSE/BTC, the picture is largely the same, with the range that preceded the bull cycle holding support at 150 satoshis for 283 days before rallying off towards all-time highs. The current range between support at 200 satoshis and resistance at 285 has been in play for 60 days, for context. I want to see that all-time low at 100 satoshis continue to be protected and price re-accumulate within this range throughout Q3, DCA-ing into a position within that range and looking to hold for the next cycle.
dYdX:
DYDX/USD
Daily:
DYDX/BTC
Daily:
Price: $1.85 (9002 satoshis)
Market Cap: $120.975mn
Thoughts: Given that dYdX has only been trading since September, both pairs look identical, so I will focus on the Dollar pair here.
Looking at DYDX/USD, we can see that price rallied off initial support at $2.97 into an all-time high two weeks later at $29, but then began the current bear market and price has since bled out 96.5% from the high into an all-time low at $0.99. Since that low formed in mid-June, price has rallied off it to reclaim support at $1.35 and is currently capped by resistance at $2.37. Whilst this structure is very nice for a potential bottom, particularly in the context of the drawdown, I would want to see that all-time low now protected hard and price consolidate in a tight range above $1.35 for some time to get interested in a position. One other turn off for me here is also the low float, with only 7% of max supply in circulation, so the fully diluted market cap is huge and I would need to do a lot more research on unlock schedules / token emissions etc. before getting involved. But on a strictly price-action viewpoint, this is looking bottom-ish at present but we want to see $1.35 now act as strong support, otherwise it is more time goblin-town for dYdX holders.
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.
