Market Outlook #184 (25th July 2022)
Hello, and welcome to the 184th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Polygon, Cosmos, Axie Infinity, Chiliz and Kadena.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $21,963
Market Cap: $419.555bn
Thoughts: If we begin by looking at BTC/USD on the weekly, we can see that price rallied off the weekly open through the 200wMA at $22,785 into $24,383 but found resistance just shy of that former support level above and ultimately closed the week back below the 200wMA. That being said, we closed firmly through resistance at $21,710, so as of now we are largely in a no-trade area for me. Looking ahead, holding above $21,710 this week would indicate another push towards $25.4k is underway, with any reclaim of that level of support then opening up the larger squeeze towards the major support turned resistance around $28.7k. If, however, we lose $21.7k this week, then I think the rally has topped out and we are likely to return towards that $18.9k support level to retest it, where if that fails we are no doubt beginning another leg lower to take out the $17.6k swing-low.
Looking at the daily, we can see clearly how this would look like a deviation if following the breakout we now break back below $21.7k, where any retest from below becomes your short entry with invalidation on a daily close back above the level with a target of ~$19k. It is also important to keep an eye on that daily RSI which has been trending higher since the bottom formation, where if that trend breaks whilst we begin to break down back inside the range, we have likely exhausted the momentum for this move and I would be considering another leg lower just like the previous one, where you can see we deviated above $30k resistance into $31.3k, closed back inside, retested as resistance and then broke fresh lows. We may well be seeing something similar play out here, and if $21.7k is lost then we have our first step towards taking out the $17.6k low. Below that level, if we do get down there, I am looking firstly at $16.1k followed by $14.3k.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1524 (0.0694 BTC)
Market Cap: $185.565bn
Thoughts: Beginning with ETH/USD, we can see from the weekly that price rallied off the open like BTC all the way into the weekly close at $1598, just shy of the prior support turned resistance at $1710 but printing a stronger weekly candle than BTC/USD for sure. If we do push up early this week and take out last week’s high into that $1700 area, I will be looking for reasons to short up there, with a first target of $1416 – the reclaimed prior cycle highs. If we close back below that level I think we are going to reverse this entire rally back into $830 to be honest, with the 2021 open at $737 my main target if $1416 fails to hold as reclaimed support. If we drop into the daily we can see that price is currently range-bound between $1640 as resistance, with multiple swing failures into that level, and support around $1464. Just to trap early shorts it would be nice to see all three wicks taken out to the top of the range into $1700 early this week and then price close back below $1640, which would be the short trigger for me. If we resolve to the upside of this range and close the daily above $1640, I would still expect that $1700 level to provide some resistance, and if it fails to do so and we close back above $1710, the next major level of resistance is back around $2040, but I would be very surprised to see ETH/USD rally whilst BTC/USD breaks down, so that’s something to keep an eye on.
Turning to ETH/BTC, we can see from the weekly that we closed last week near weekly highs, back above the mid-range and right into that trendline resistance from the 2021 high, so we are sitting at a critical area at present. Weekly RSI is also pushing up into an area from where momentum has previously slowed down and led to another leg lower, so if we see the pair continue to push higher and close this week above 0.075, I think we’re looking at a possible range high retest up near 0.086 and momentum at that point would look to have reversed on the higher timeframes, which is key. However, if the trend persists, we should find resistance below 0.072 this week and begins to break back below the mid-range, leading to a return towards at least reclaimed range support at 0.055. On the daily we can also see that volume has largely been trending lower since we began the rally, which is not promising as price now contends with the 200dMA and 360dMA as resistance.
Cardano:
ADA/USD
Weekly:
Daily:
ADA/BTC
Weekly:
Daily:
Price: $0.495 (2257 satoshis)
Market Cap: $16.732bn
Thoughts: Beginning with ADA/USD, we can see from the weekly that the pair continues to consolidate below the 200wMA but support at prior resistance ~$0.42 is holding for now, and so we have a nice clean range. Momentum indicators are pointing to no momentum at all really and the market is yet to give us a direction. If we do close the weekly back above the range highs and the 200wMA at $0.56, I think we see a relief rally back towards the trendline resistance and prior support around $0.75, but if BTC/USD breaks back inside $21.7k I think downside resolution of the range becomes more likely, where if we close below $0.42 I would be looking to start playing shorts once again with the next major support all the way down near $0.20, with minor support in between at $0.27. Looking at the daily, we can see how range resistance has formed around $0.54 at prior support and price is currently testing it – climb back above that and we have a structural shift and can look for longs to play into $0.68 as a first target followed by a 200dMA retest at $0.81.
Turning to ADA/BTC, we are still just consolidating above trendline resistance but below key resistance at 2500 satoshis, having now formed a higher-low at 2110 above the 1975 satoshi support level but still not really indicating any real direction. A weekly close above that 2500 area would be huge, as we would be looking at a weekly structure change if that 2750 satoshi swing-high gets taken out off a key historical support level and I would then be looking for long setups towards 3100 satoshis. But if price breaks back below 1975, I think we return to the 200wMA to retest it as support, and that may be where price begins to consolidate once again. If, however, the 200wMA gives way, things become bleak for the pair, as I see no support until 950 satoshis followed by strong support back towards 700. It may be the case that what we see on the BTC pair is a deviation below the 200wMA and then a reclaim and consolidation above it over the coming months, which would be something I’d be keen to buy.
Polygon:
MATIC/USD
Weekly:
Daily:
MATIC/BTC
Weekly:
Daily:
Price: $0.83 (3781 satoshis)
Market Cap: $6.65bn
Thoughts: Beginning with MATIC/USD, we can see from the weekly that price is now pushing right up against prior support turned resistance at $0.92, as well as trendline resistance from the all-time high, having rallied off support at $0.30. Weekly RSI is now pushing back up into an area from which we might expect the move to be exhausted and another leg lower to begin within a longer-term downtrend, so that is something to be aware of as we hover around key resistance. Break and close back above $1 and I think we fill in the gap back into prior support around $1.31 at the very least, if not retest the mid-range at $1.80. If, however, we take out last week’s high and then break down and close back below the trendline again this week, I think we can start looking for short setups back towards the $0.60 area as a first target.
Turning to MATIC/BTC, we have already seen the pair push back into the mid-range, where it rejected at 4300 satoshis last week, as one might expect of a first test of that level for the first time since the beginning of the year. If we drop into the daily for clarity, we can see that the pair has actually reclaimed the 200dMA and 360dMA over the past week as it pushed into the mid-range, and if the pair can now hold above them and prior support at 3200 satoshis, the possibility of another leg higher opens up and we could look for a move towards 4710 satoshis as the next resistance, with no resistance beyond that all the way back into the all-time high weekly close around 5700 satoshis. If, however, price breaks back below 3200 satoshis and retest it as resistance, this looks like a deviation above key resistance followed by a breakdown from the mid-range and I would expect the entire rally to be retraced, supporting shorts on the dollar pair, as price returns to reclaimed support around 2000 satoshis.
Cosmos:
ATOM/USD
Weekly:
Daily:
ATOM/BTC
Weekly:
Daily:
Price: $9.36 (42,620 satoshis)
Market Cap: $2.68bn
Thoughts: Looking firstly at ATOM/USD, we can see on the weekly that price has rallied off prior resistance turned support at $6.40 into reclaimed resistance at $10.55, where it rejected last week. Price is now moving lower and if we start to break back below $9 this week, I think the top for this relief rally is likely in and we can look for shorts back towards $6.40 to retest that level as support. The long side is also quite clean here, because if we can close the weekly above $10.50 there is no resistance all the way back into the $14.60-$16.17 range, which is plenty of upside to look for long setups within. Dropping into the daily, we can see that momentum does appear to be dropping off a little here but really it is that $9 level that is critical, as it has historically been support, then acting as resistance on the last push up before price made a higher-low and then broke through it to rally into $11.35; if we now close back below it, we also start to paint bearish structure and I’d be looking to short a retest of that level from below with invalidation on a close above $10.55 and a first target of $7.77 and a second target of $6.40.
Turning to ATOM/BTC, we can see on the weekly that price has very weakly broken out above trendline resistance from the 2021 high but is now starting to struggle as it pushes again prior support around 44.5k satoshis, with price looking close to a breakdown back below prior support at 43k satoshis. If we close consecutive daily below that level early this week, I think we lose the 39.1k level too and the top for the rally is in, and once we get back below 39.1k satoshis I would be looking for shorts on the Dollar pair as the BTC pair has no support all the way back into reclaimed support at 30.5k satoshis. Nothing else to add here.
Axie Infinity:
AXS/USD
Weekly:
Daily:
AXS/BTC
Weekly:
Daily:
Price: $16.38 (74,600 satoshis)
Market Cap: $1.35bn
Thoughts: Beginning with AXS/USD, we can see that price has been consolidating in a tight range between prior resistance turned support at $11.95 and resistance around $16.10 for about 6 weeks at this point, marginally break above that resistance last week to close at $17.25. If we can hold above it and break above last week’s high, I think we can look for longs on the pair towards reclaimed resistance at $30.88, with no real resistance in between, but if the broader market takes a shit I don’t think that last week’s marginal breakout is going to save AXS, and I would instead expect a downside resolution to this multi-week consolidation, with another leg lower likely to follow. If we look at the daily, there is some support right around $5.50 (that I have forgotten to mark out on the chart) but the next major support is actually the prior range lows at $2.60. Whilst the opportunity to buy a $2.60 would likely be a gift long-term, I don’t think we’re in for another 85-90% of downside from current prices on these larger, fundamentally sound projects, and so we are more likely to either see a deviation below $11.95 followed by a reclaim and consolidation back above that level, thus beginning to look more like a bottom formation, or we’re going to see that $2.60 area front run by a support level above it, potentially the $5.50 area. This is something I have on my radar for sure going into August.
Turning to AXS/BTC, we can see from the weekly that the price-action looks largely the same, but with a larger range in play, with support at 48.5k satoshis and resistance at 90k satoshis. It is likely that this range becomes the accumulation range for the next cycle, but to have more confidence in that I would want to see 48.5k deviated below and price then reclaim the level and continue to consolidate above it, at which point I would be looking to average into a spot position in AXS, with invalidation on a breakdown below range support, as the next major level of support is at the previous range resistance of 21k satoshis.
Chiliz:
CHZ/USD
Weekly:
Daily:
CHZ/BTC
Weekly:
Daily:
Price: $0.105 (481 satoshis)
Market Cap: $634.991mn
Thoughts: If we begin by looking at CHZ/USD, we can see from the weekly that price has appeared to bottom out around prior resistance turned support at $0.077, but continues to make lower-highs below $0.147, with last week swing-failing the lower high at $0.12. The structure here is still pointing to a longer-term downtrend but volatility is beginning to flatten out, which is what we want to see in that the latter stages of a bear market, but that being said there is very little really holding the Dollar pair up here above $0.077. If that level gives way if/when the broader market pukes, the next major support level is over 50% lower at $0.032, with a key historical level below that at $0.022. That latter level if it comes would likely be a blind bid level for me, but whether we get it or not I do not know. Again like other tokens with similar structure, what we may see is a deep deviation below support at $0.077 followed by a reclaim and continued consolidation above the level, which would be nice structure to want to get involved within. We can only talk about upside if the pair is able to reclaim $0.15, which would be a strong sign of $0.077 being a longer-term bottom, as weekly structure would shift to bullish. Dropping briefly into the daily, we can see that the current range has been playing out for over 10 weeks, with support being found at a 92% drawdown from the high, so there is scope for a deeper drawdown as per historical bear markets and that isn’t something I am ruling out here.
Turning to CHZ/BTC, we can see that price has been capped by trendline resistance from the all-time high and has continued to put in lower-highs and lower-lows since March 2021. The most recent breakdown took price to 313 satoshis in May but price has held above that low since, but is currently struggling at another lower high around prior support ~530 satoshis. If the downtrend persists, we could see this area mark out another high and a move back below 419 opens up another leg lower, where I think we are ultimately bleeding lower towards the historical resistance turned support level at 200 satoshis.
Kadena:
KDA/USD
Weekly:
Daily:
KDA/BTC
Weekly:
Daily:
Price: $1.53 (7032 satoshis)
Market Cap: $285.409mn
Thoughts: If we begin by looking at KDA/USD, we can see that price has returned to historical resistance around $1.81 following a 95% drawdown since November 2021. Price has found support at $1.38 and has now held between that level and $1.81 as reclaimed resistance for 11 weeks, with weekly ranges beginning to tighten up. If this range resolves to the downside and price closes below $1.38, the next level of support is $0.91, where the formation of a new range would be likely. However, hold above this support (or deviate below it and reclaim it) and I think we are seeing the formation of a longer-term bottom, where a breakout to the upside and reclaim of $1.81 as support would provide confluence. I am looking to buy KDA in the coming months but I do want to see volatility diminish and range-bound price-action persist for a longer period of time – when all interest is lost and the market is unexciting following a 95% drawdown, that’s when I want to be a buyer.
Finally, turning to the BTC pair, we have very similar price-action here, with reclaimed resistance at 8000 satoshis and price finding support above 5000 satoshis, with the general structure looking like the latter stages of a market cycle – if this is correct, we are approaching the depression phase which correlates with significantly diminished volatility, flat tight price ranges and general sentiment of boredom and improbability of a return to all-time highs. I would expect that to occur late in Q3 if I am correct and that is when I will be looking to allocate a larger percentage towards spot altcoins.
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.
