Market Outlook #190 (4th September 2022)
Hello, and welcome to the 190th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, BNB, Solana, Cosmos, Aave, Fantom and Ethereum Name Service.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Market Cap: $377.715bn
Thoughts: Looking firstly at the monthly chart for BTC/USD, we can see that August took out the July high into prior support turned resistance at $25k and then rejected, selling off into the monthly close, where August closed out right where July open: ~$20k – or the previous cycle high. For now, BTC continues to refuse to close the higher timeframe below this level, but the retracement of the entire July rally after taking out the high into resistance does not look promising for short-term trajectory. If we do start to break down here on the lower timeframes, I would at least expect $17.5k to be swept before a bottom can be found, but the next monthly support is down at $13.9k, so that is something to keep in mind if $17.5k is closed below and price breaks down from there.
Turning to the weekly, we can see that last week closed right at the weekly low of $19.5k and price has not done much this week except rally weakly and retrace back towards the open. I am expecting to see the lows at $18.75k tested early next week, where if we see some demand in between there and $17.5k, I could see another bounce higher to retest some of the minor levels above as reclaimed resistance, but to be honest whilst price is below the previous cycle high I am not expecting much but further downside until we sweep $17.5k. If we do see a push lower into that level next week, I am looking for buyers to step in and reclaim the level, forming a swing-failure on the weekly, where I would then use this week’s low as invalidation for any long setups that present themselves the following week. If, however, we close below $17.5k when the level gets swept, I am not expecting much by the way of demand before we retest that all important $14k area, where the 360wMA is also sitting.
Dropping now into the daily, we can see how structure is bearish, with prior support at $20.8k acting as resistance, with price now range-bound between there and minor support around $19.4k. Any daily close below that minor range support and I do think we immediately flush the triple-bottom at $18.8k, where I would look to play reversion back into the $20k area if we see buyers step in and reclaim that level on the daily timeframe, with invalidation at $17.5k. If we don’t get that deviation and reclaim of $18.8k but rather close below the level, I am not looking for any positions until $17.5k gets taken out or daily structure flips bullish again by reclaiming $20.8k as support. Short-term trajectory looks firmly bearish but we are sat near range support, so risk-reward isn’t favouring shorts for now…
Price: $1,555 (0.0788 BTC)
Market Cap: $190.113bn
Thoughts: Beginning with ETH/USD, we can see from the weekly that price bounced off the open at the previous cycle high ~$1415 and rallied into prior support turned resistance around $1620, now coming off a little to close the week closer to $1560. ETH obviously does not look anywhere near as potentially brutal as BTC, but no doubt if BTC breaks that $17.5k low, the whole market will look vastly different. That being said, based off this weekly, the thing that would concern me if I were long here is the clean double bottom at $1415-1420, with price having rallied basically off the open without really wicking below the prior cycle high. If this low gets taken out next week and price reclaims $1420, that would be a clear sign to me that longs are favourable moving forwards and I would expect the $1700 support turned resistance level to be retested. However, close back below that level and I think the 200wMA is getting retested at $1290. Dropping into the daily, we can see that ETH broke above minor trendline resistance and then rejected at reclaimed resistance around $1620, now closing the daily back around $1560. This is currently looking like a lower high within this downtrend, particularly given how weak the breakout beyond the trendline has been, and so I would expect price to turn lower here and take out that $1415 double bottom, from which point the trajectory becomes dependent on the reaction – sweep and reclaim = move higher back towards $1700; break and close below = $1290.
Turning to ETH/BTC, we have seen the pair bounce off support at 0.072 and show resilience this past week, retracing much of the sell-off of the past two weeks to retest the 2022 open, wicking above last week’s high. However, as I mentioned last week, if we deviated last week’s high into the 2022 open and then rejected, I would expect the rally to be invalidated and retraced the subsequent week, so if we look at the daily for greater clarity, we can see that price wicked above 0.08, clearing the 2022 open, but then closed below it, failing to close back above it since. If we were to now close cleanly above it, that would invalidate the deviation and likely lead to the 2021 high retest at 0.087. If, however, we start to turn lower from here and then for a lower high, this would look very much like rejection after taking out the weekly high, which would in turn point to the 0.072 area being retested as support. Again, above the mid-range, not a huge amount to be concerned about for ETH bulls, but below it it becomes a different picture entirely.
Price: $277.54 (0.014 BTC)
Market Cap: $44.778bn
Thoughts: Looking firstly at BNB/USD, we can see that price rejected at long-term trendline resistance and turned lower, selling off for three straight weeks, now pushing up against reclaimed support at $277, where it has consolidated this week. Whilst it is below the trendline and, more broadly, prior support turned resistance at $317, structure and momentum continues to point to lower prices with price remaining in its downtrend. Dropping into the daily, the 200dMA also continues to cap price, providing confluence with that $317 level for a shift in both momentum and structure. Price is currently making lower highs into the $277 support, which is not promising for bulls, and were this level to fail I would expect to see $254 next tested as minor support, but with major support back at the bottom of the range ~$210. If bulls do step in above $254, I would be looking for a trendline break and a daily structure shift (higher-high) to look for longs towards $317, where it would be wise to hedge or exit and then reload longs on a move above that confluence of resistance. Alternatively, the next level below where I would want to long is back at $210.
Turning to BNB/BTC, we can see that price is consolidating just below the all-time high at 0.0143, with the past two weeks of price-action confined between that high as resistance and minor support at 0.0135. If we drop into the daily for clarity, we can see that momentum is diverging up here and if we do break below 0.0135, I would expect to see the breakout level retested around 0.0124. If, however, we can close the daily above 0.0143, for now the divergence is invalidated and the next level of resistance overhead is the 1.618 extension at 0.0159. Not much else to add here for now but I am watching for more divergence if price pushes higher to begin building a longer-term short on the Dollar pair.
Price: $31.68 (0.00161 BTC)
Market Cap: $11.122bn
Thoughts: Beginning with SOL/USD, we can see that price broke below reclaimed support at $35.60 last week and closed out at $30.40. with this week having shown a weak bounce off very weak support but not much volume or movement at all. I would expect to see further downside follow from here back into the major support level and June low at $26, above historical range support at $24.25. That is the zone I want to see retested before looking to reload longs for Solana, as any wick below that level followed by a reclaim begins to look like a longer-term bottom formation to me. However, if we see price close the weekly below the level, I am looking at $19 as the next major support, where if that were to fail all hell breaks loose, with $11.60 minor support below that. Dropping into the daily, we can see how little movement there has been this past week, with a tight range of consolidation around minor support; this is not a level I would expect to form a bottom, but if we do move higher off this somehow I would want to see $35.60 reclaimed before getting excited about any sustained relief. More likely, in my opinion, Solana does take out that June low. Spot becomes very attractive if we see demand around those lows.
Turning to SOL/BTC, we can see that last week closed firmly below minor support at 0.00161 and this week has seen price consolidate in a very tight range between that level as resistance and 0.00152 as support. From here, unless the pair can reclaim that multi-week range support, I would expect to see the pair linger lower towards prior resistance at 0.00137.
Price: $12.81 (64,800 satoshis)
Market Cap: $3.669bn
Thoughts: Beginning with ATOM/USD, we can see that despite the long wick higher last week that took out multiple weekly highs and then rejected to close back near the open, this week has reversed all of that, rallying off support at $10 back into $12.44, around which it is likely to close. If price can squeeze higher again next week and start to close the lower timeframes above $13.10, I would expect minor resistance at $14.66 to be retested, with greater resistance just above at $16.16. We are likely to be close an inside week either way, and so if we do take out $13.41 early next week and then reject and start to close back below $12.46, that to me would make shorts favourable all the way back down to $10 to take out the lows in that area. There is also the potential for bearish divergence to form on momentum indicators above $13.41, but that is yet to play out.
Turning to ATOM/BTC, we can see that price has shown great strength to break back above 55k satoshis and rally through reclaimed resistance at 62k satoshis this week. Nothing about this at present is looking like a top is in, but we are now at a zone of resistance that has capped price in the past. If we were to break and close through this level, I would expect another 15-20% rally to be on the cards, with the 2020 highs at 77k satoshis the next target. If we drop into the daily, we can see that there is some bearish divergence forming here on RSI but not on AO, and I prefer to see both aligned to take trades off momentum divergence, so for now there still appears to be strength up here. Not much else to add here for now…
Price: $88.35 (0.00447 BTC)
Market Cap: $1.239bn
Thoughts: Beginning with AAVE/USD, we can see that price has rejected off the 200wMA once again and closed lower last week into prior resistance at $77, from which price rallied this week back into reclaimed resistance at $90.60. I would expect this level to cap price if the pair is to move lower again, with the next area of support down at $62.10, with the June low at prior resistance ~$49 the next major level below that. Thinking longer-term, if we do retrace back into that zone, that’s where I would be keen to start accumulating spot if there was evidence that the $49 low was either protected or swept and reclaimed. Dropping into the daily, structure is bearish below $90.60, so if we see that level reclaimed and a higher-high form above it, this $77 low may well be a short-term bottom and we could see price rally back towards the 200dMA and prior support at $113 which has capped the pair for so long now. Only above that level does the longer-term picture begin to shift to favour further upside.
Turning now to AAVE/BTC, we can see that the past couple of months have been spent within a consolidation channel above support at 0.00343, and if we start to break and close above 0.0047 I would expect to see further upside into the major level capping price at 0.00547. That is the important level overhead and if we do push into that level, whilst I would not expect a breakout on the first attempt, any sustained move above it would open up a significant amount of upside that I would want to be on board for, with the next major resistance beyond it at 0.0079. If, however, this period of consolidation leads to a breakdown below 0.00393 and the 200dMA, this would look like a distribution range between two key MAs and above key reclaimed support, which would suggest to me that much of this rally would be retraced, back towards 0.00285. Awaiting the range breakout is key here.
Price: $0.27 (1374 satoshis)
Market Cap: $690.644mn
Thoughts: If we begin by looking at FTM/USD on the weekly timeframe, we can see that price rejected below trendline resistance and the 200wMA, as well as horizontal resistance at $0.40 and has since continued lower, with last week closing back below support at $0.29 into $0.265. We are now coming into major support at $0.24 which has supported price since May, and so any weekly close below that level would open up another leg of downside into the range lows from May 2021 around $0.18. If, however, we start to see buyers step in here and price begin to consolidate around $0.24, this is a level I am interested in for spot given the 94% draw-down, and if we then see price move higher off it and break beyond trendline resistance, I would look at that as a reason to begin scaling into more spot with invalidation around $0.20 and looking to hold for a cycle. If that doesn’t occur or that spot invalidation hits and I exit, I would want to see $0.15 swept and then $0.18 reclaimed to get back involved.
Turning to FTM/BTC, we can see that price is sitting below reclaimed resistance around 1740-1900 satoshis, which is a very significant zone of resistance for the pair. Whilst it is below this, I do not expect much relief for the dollar pair, but if we were to close above it I would expect to see much more upside unfold. For now, however, we have rejected that zone again and broke lower, and I am expecting the 1150-satoshi swing-low to be retested as support; if that were to fail, I think we retrace this rally all the way back into the support base around 900 satoshis, which would make for an ideal area to form a longer-term bottom. Keeping a close eye on Fantom going into Q4…
Ethereum Name Service:
Price: $13.61 (68,840 satoshis)
Market Cap: $275.574mn
Thoughts: As ENS has only been trading for less than a year, both pairs look pretty much identical here and I will opt to cover the Dollar pair as the structure is more clear – as is often the case.
So, looking at ENS/USD, we can see that price rejected at $18.70 and broke back below the 200dMA, with daily structure now bearish and price trending lower since August, with the 200dMA now acting as resistance along with prior support at $14.55, which was a lower-high itself. As such, if we were now to break and close back above $14.55 and reclaim it as support, this would look like a short-term bottom to me and I would be looking for longs with invalidation at $11.20 and a first target of $18.60, followed by $21. If we break lower from here, which is actually favourable for me from a longer-term spot allocation perspective, I would simply expect the downtrend to continue back into support at $9.50, which is fairly strong support. I would then want to see price start to consolidate around there for a protracted period to buy spot with an invalidation at the all-time low ~$7.17. If that low got breached and I exit that spot position, I’d want to see a deep wick through it followed by a reclaim and consolidation above it for the most confidence (and the best price) for a long-term spot position. That is what I am hoping will occur but I am letting price tell me what is happening – I am happy to buy at $14.60 if structure and momentum point higher.
And that concludes this week’s Market Outlook.
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