Market Outlook #187 (15th August 2022)
Hello, and welcome to the 187th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Polygon, Chainlink, Monero, Ethereum Name Service and XCAD Network.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
P.S. I had some major issues with my website over the past week, hence last night’s email. Somehow, a week’s worth of data was deleted, so last week’s Outlook is gone, which is rather annoying. I think I’ve fixed the login issues I was having, so that’s a positive, but I’m in contact with technicians to find out what happened.
Market Cap: $465.345bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price took out the prior highs around $24,666 towards prior support at $25,375, rejected short of it and closed the week marginally back below the level, but firmly above the prior inside week high thus invalidating inside week failure. Nonetheless, we have another swing-failure from key resistance up here and, as of this morning, we have taken out last week’s high again into $25,214 and rejected hard, now moving back below $24,400. If today’s high holds as the high of the week, it does look like this rally has peaked given the persistent sweeps and rejections, and we would be looking firstly for a 200wMA retest as support at $23,055, followed by a retest of prior resistance turned support at $21.8k if that gives way. If, however, today’s move gets invalidated and bulls step in once again, what we need to see for further rallies is a daily close above $25,375, which would open up that 15% move higher into $28.7k.
Dropping into the daily, we can see the structure more clearly: at present, it looks like early shorts were continually baited and trapped, but given the waning momentum up here I think this might well be the ‘last’ trap before some sort of downside flush and if we close today below $24,545, I think any bounce back towards that area is a short with invalidation above the weekly high and a first target of the $22,500 area. If we start to see daily RSI close below that trendline too whilst this occurs, we have confluence for some downside to follow. The area between $21.8k and $22.5k is likely to find some demand, so I would look to hedge any shorts in that area, where if we then close back inside that $21.8k level we can then look for fresh shorts towards $19.8k. Close the daily above $25.4k and all of these shorts from the past few days are trapped and I would look to buy an intraday dip with a stop on a close back below $24.5k, targeting $28.7k.
Price: $1914 (0.0795 BTC)
Market Cap: $235.274bn
Thoughts: Beginning with ETH/USD, we can see that price rallied higher last week into prior resistance at $2036, where it rejected and closed the week back around $1936. We are still in a firm uptrend here and we remain above that key $1700-1730 area, but price is now testing its first major resistance level above that key zone. If we do pull back from here, any move into $1730 would look like a buying opportunity with a very clear invalidation: a close back below $1700 – as this level should be acting as reclaimed support following the breakdown. In that scenario, we could target a $2036 retest as a first target, followed by a trendline retest and prior support at $2308. However, if we do start to close back below $1700, as I mentioned on Twitter last week, we have a really nice setup for a short, which, if we drop into the daily, we can see would look something like this: enter shorts as close to $1700 as possible on a retest from below, look for a breakdown below $1615 to add to the position and then ride it down into $1415 as a first target followed by $1290 if that gave way, with invalidation on a weekly close back above $1730.
Turning to ETH/BTC, we have also now extended into range resistance that has capped price since May 2021, with price only briefly breaking above that level during that time but immediately losing it. This is in conjunction with continually declining volume into this resistance level and confluence with the yearly open around 0.0796. If we look at the daily, we can see that volume drop-off more clearly as price has extended higher and over the weekend the pair hit the top of the range at 0.0821 and rejected, moving back below the yearly open. It is too early to confirm whether this entire rally has merely been a deviation above the yearly open backed by a fundamental narrative, but if we start to see the pair pull back hard here as ‘the merge’ approaches, we may have another sell the news event from which this entire rally gets undone. Too early to say, as I mentioned, but something to keep in mind. Short-term, it is likely we do pull back here and the first level of interest below is 0.075 as resistance turned support. If that level acts as support, we likely take another crack at range resistance, where any breakout above the 0.0821 level opens up extension beyond the 2021 high at 0.088. If, however, price finds no demand at those minor support levels below, the mid-range retest becomes key, which has confluence with two important MAs and also likely the trendline breakout – break back below 0.0687 and it is looking like a confirmed deviation above yearly open, and I would be targeting the bottom of the range as a first target.
Price: $0.372 (1541 satoshis)
Market Cap: $18.272bn
Thoughts: Beginning with XRP/USD, we can see from the weekly that there has been no real momentum for the pair off the local bottom and price continues to be range-bound between $0.29 and $0.41, with the 360wMA at $0.39 also providing key resistance here. As mentioned in a recent post, if we were to see the pair clear that $0.41 level, there is clear skies back into a 200wMA and prior support retest around $0.49-0.50, so I would absolutely want to get on board to play that range higher. However, for now there is no evidence we are moving higher. If we drop into the daily, we can see this lack of momentum quite clearly with price now also looking to turn back below reclaimed support at $0.371. If we see that level lost again and price retest it from below as resistance later this week, I would take that short with $0.41 as my invalidation and targeting $0.33.
Turning to XRP/BTC, weirdly enough the trajectory I marked out months ago is playing out very well indeed – obviously I would not expect it to continue to do so in quite as accurate a manner else we’ll be looking at 730-satoshi XRP in a couple of months, but that downtrend remains persistent, and it looks like another lower-high is in. If we do turn lower again from here, the 1265-1380 satoshi range becomes paramount to hold as support, because if it fails the next leg lower will see the 940 satoshi level tested as the next support and thus there will be plenty of downside to play for XRP. Looking at the daily, the downside trajectory is clear and we continue to also be capped by the 200dMA and 360dMA, so the first indication of an end to this downtrend will be a reclaim of the 1900-satoshi level.
Price: $0.97 (4031 satoshis)
Market Cap: $7.797bn
Thoughts: If we look firstly at MATIC/USD, on the weekly we can see that the pair marginally closed above its trendline resistance, retesting it as support and now contesting prior support turned resistance around $0.98. If the pair can hold above this area, the next area of resistance is overhead at $1.31. However, close back below last week’s low and I think we see $0.75 retested as support. Looking at the daily for more clarity, we can see that price has been moving higher on declining volume and momentum for the past couple of weeks, which isn’t promising for bulls, and the rejection from last night at the 200dMA and subsequent break and close back inside the prior weekly high at $0.98 is somewhat telling here. There is an opportunity to enter shorts early here and exit on a daily close above the 200dMA at $1.09, but I would prefer to see structure shift and price break and close below $0.85, giving us bearish structure, exhaustion and rejection from a key level. In that instance, I would look for shorts into $0.75 intraweek with a second target of reclaimed support around $0.62 if the first level gave way.
Turning to MATIC/BTC, we can see that price is now consolidating below the midrange at 4320 satoshis and has been for weeks now. If we drop into the daily, we can see that momentum has been declining in this area and if we see the daily start to close below 3650, I would expect to see another 15% drop towards the 200dMA at 3220 to retest it as support. We would also then have a return to bearish market structure, so a lower-high following that would open up further downside back towards the base of the rally around reclaimed support ~2500 satoshis.
Price: $8.59 (35,610 satoshis)
Market Cap: $4.054bn
Thoughts: Looking firstly at LINK/USD, we can see from the weekly that price has rallied off the local lows over recent weeks but retested resistance at $9.67 last week and rejected, closing at $8.75. There is still no signs of a shift in momentum or structure here on the weekly timeframe, but if we were to close above $9.67 we do have a higher-high, which is important to keep in mind. That being said, there is so little upside beyond that level into the 200wMA and prior support around $11.40 that I don’t know whether we would get an actionable setup with decent R/R in that area. If we do squeeze higher into the 200wMA though, I will be looking for signs of exhaustion to enter swing shorts back towards the base of this rally. If we drop into the daily, we can see that the 200dMA is also overhead in the same spot as the 200wMA, providing confluence for resistance in that area. Right now, the daily is not showing signs of exhaustion with rising momentum into this resistance. As such the pull-back here into prior resistance has the possibility of forming a higher-low at $8.26, from which we may see another crack at resistance. If we break back below $8.26 here and then put in a lower high below $9.75, that may well mark out the top of this rally short of the 200wMA but again I don’t see much of an opportunity to go short following that, as the next major support is just below at $7.26. This is something we’d have to look at intraday to see if anything pops up.
Turning to LINK/BTC, we have rallied towards the 200wMA here but again just slightly shy of 43k satoshis, with price rejected at reclaimed resistance at 40k satoshis last week. We are also a little short of a trendline retest for another lower high in this downtrend, so if we do get one more squeeze up to take out last week’s high and then start to break down, that provides confluence for another leg of downside on the dollar pair. If we look at the daily, we are pulling back into prior resistance and so this where we would expect to see demand step in if we are to get another push higher, with any close back below 33k satoshis invalidating that idea. Ultimately, until we are back above 45k satoshis I don’t think this looks like a sustained reversal but more like a bear market rally, and so I continue to expect a retest of the May lows.
Price: $165.88 (0.00687 BTC)
Market Cap: $3.012bn
Thoughts: If we look firstly at XMR/USD, we can see from the weekly that price is pushing up against prior support turned resistance at $171, as well as the 38.2% retracement level. This is where we might expect to see price stall or even put in another lower-high if this downtrend is to persist. If we do start to come off here, I would expect to see reclaimed support at $145 retested at the very least. However, if the pair can close the weekly above $171, I think we squeeze into the 50% retracement and reclaimed resistance at $195. Dropping into the daily, we can also see that momentum is diverging up here as price is capped by the 200dMA. The last time we rejected off the 200dMA price halved, so that is something to pay attention to here. I would like to start building a short here if we can get back below $154, turning daily structure bearish again, with invalidation above $175.
Turning to XMR/BTC, we are pushing up against the 200wMA, which price has not traded above since April 2019, so a reclaim of 0.0076 would be huge here and likely to continue the trend higher towards the 260wMA and major resistance around 0.0095-0.01. However, if the 200wMA continues to cap price and we break back below 0.0061 here, I think we see prior resistance turned support retested around 0.005. Again, much like the Dollar pair, if we look at the daily we can see exhaustion and bearish divergence up here, which would be invalidated by a daily close above 0.0074 but for now looks to be playing out with price turning lower. Break and close below 0.0065 and I think we see 0.0061 retested, with any move below that opening up another 15% of downside.
Ethereum Name Service:
Price: $14.31 (59,320 satoshis)
Market Cap: $289.441mn
Thoughts: As ENS has only been trading since November, both pairs look virtually identical and so I will focus on ENS/USD here, particularly as that has clean structure.
Looking at ENS/USD, we can see that price formed a bottom around the all-time low at $7.17m which was a 96% drawdown from the all-time high. This bottom was retested in June and price turned higher from there, reclaiming multiple levels of support and rallying back above the 200dMA in late July, with price now forming bearish divergence and pulling back from $18.60 into the 200dMA at $14.12 to retest it as support. If the pair fails to hold here, this will look like a deviation above a key level and a key MA and I would expect to see most of this rally unwound back towards at least $9.50 to potentially form a new range support in that area, where if we then continue to consolidate I will look to scale into a position with the all-time low as my invalidation. Ideally, I want to buy as close to that $9,50 area as I possibly can. If the 200dMA does hold here, bulls would want a daily close above $18.60 to invalidate the deviation/exhaustion idea and I would expect to see major resistance around $24 retested in that scenario.
Price: $1.91 (7801 satoshis)
Market Cap: $58.403mn
Thoughts: As XCAD has only been trading for a little over a year, both pairs look near-identical and I will focus on XCAD/USD here.
So, we can see on the Dollar pair that price retraced 88% from the all-time high at $11.37 from mid-December, printing a local bottom above historical support at $1.35 a few weeks ago, from which price is now turning higher and reclaiming support at $1.73. If this level continues to hold as support, I would expect to see price move up towards reclaimed resistance at $2.47, as the next major resistance, which may well coincide with a 200dMA retest which capped price on the previous move higher. If we see that and price marks out another lower-high in the overall downtrend up there, I would be looking for a return to the $0.83 area as the next major support. Failing that and assuming serious strength in the market, I would want to see $1.35 act as an accumulation range low and price to consolidate between there and $1.73 as range resistance for a protracted period of time before considering entry for a longer-term position.
And that concludes this week’s Market Outlook.
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