Market Outlook #191 (11th September 2022)
Hello, and welcome to the 191st instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Uniswap, Synthetix, LooksRare, Decentral Games and SpookySwap.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Market Cap: $413.045bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that we are poised to print a bullish engulfing off of support at $18.8k, having swept the previous two weekly lows, as well as that $18.8k level, this past week and rallied sharply. Volume is decent and RSI is ticking higher off this most recent low, suggesting a possible momentum shift. However, we remain firmly below reclaimed resistance at $21.8k, as well as below the 200wMA and below that macro lower-high at $25k. Though the signs of a reversal off this week’s sweep are promising, we are still in bearish market structure below key resistance. That being said, I do like how this is setting up and I am beginning to look at wider capital allocation whilst BTC remains supported above that $17.5k level. If we were going to take it out anytime soon, I would have expected the move below $18.8k this past week to have led to it, but instead we found demand and the level was protected. Obviously, if we now reject below the 200wMA and form another lower-high, it is likely we revisit the bottom of this range again, and whether it can stand another test is yet to be seen, but I like the initial protection following a sweep of support and $17.5k should now be the invalidation for short-term relief.
Turning to the daily, we can see that daily structure reverted to bullish following the breakdown below the prior cycle high at $19.8k, with price wicking below $18.8k and then retracing the sell-off within a couple of days, leading to an impulse higher that has reclaimed the $20.8k level. We are now sitting right below key reclaimed resistance between $21.8-22k, and if we do get a sell-off early next week I would look to buy $20.8k as reclaimed support for a breakout back above the $22k area towards $24.5k. However, if we wick above this resistance cluster and reject, we can look to play shorts early next week with $21.8k as an entry following a deviation and a target of $20.8k. If that latter reclaimed support fails, I think it is likely this rally gets retraced back into range support at $18.8k and then possibly takes out the $17.5k swing-low.
Price: $1767.45 (0.0819 BTC)
Market Cap: $216.207bn
Thoughts: Beginning with ETH/USD, we can see from the weekly that price found support around the prior weekly close at $1580 and has rallied for most of this week, now poised to close firmly back above that $1700-1730 reclaimed resistance cluster. Breaking and holding back above this level early next week would be a key sign that a higher-low has formed before continuation towards the trendline resistance and prior support at $2425, in my opinion. If, however, we fail to hold above $1700 next week and start to close back below that area, I will begin looking for shorts back towards $1416, followed by the 200wMA at $1290. Dropping into the daily, we can see that price reclaimed support at $1618 after retesting $1416 and continued to rally higher from there, with yesterday closing back above $1700 resistance into the final minor resistance at $1801 before clear skies into the 200dMA. This is where I would expect price to be capped if this is merely a deviation above the resistance cluster, where if we poke above $1800 early next week and then break down back below $1700, that is my trigger to look for shorts back towards $1416.
Turning to ETH/BTC, we have rallied a little higher following last week’s retracement of the sell-off, wicking as high as 0.0856 but now looking to close the week out at 0.082, marginally above the prior weekly highs. Volume is still low and there is the potential for a weekly bearish divergence to begin to form here as The Merge Week is upon us. If this bearish divergence confirms at range highs and we start to see price break back below this week’s low at 0.0789, I would expect a sell-the-news scenario to play out and price to retrace this past couple of weeks back towards the mid-range and the 200dMA/360dMA confluence around 0.069. Plenty to pay attention to this week.
Price: $0.51 (2364 satoshis)
Market Cap: $17.508bn
Thoughts: If we look firstly at ADA/USD, on the weekly timeframe we can see that price found support once again at $0.42 and has bounced back towards present range resistance around the 200wMA ~$-0.57. Whilst we remain below this resistance, I do not expect much of the pair, but the persistent support at a historically significant level is promising for Cardano bulls. If we were to now close the weekly above the 200wMA and the swing-high at $0.60, that is the first sign for me that $0.42 is a cyclical bottom, as we would then see weekly structure turn bullish. The problem then is that we are pressing right up against long-term trendline resistance, so it’s hard to get too excited unless we see a higher-volume weekly close above that, likely in the $0.70 area. This would look very much like a longer-term bottom and allocations for the next cycle then become higher probability. Alternatively, for those seeking higher R/R but at lower probabilities, scaling in within this range with a hard stop on a close below $0.40 is the move that makes sense to me.
Turning to ADA/BTC, price has finally broken out of the multi-week consolidation above support, marginally closing above that range resistance at 2450 satoshis last week, only to retrace back inside the range this week. If we now push off next week and get a close above 2600 satoshis, I would consider this a successful breakout and would expect the next major resistance cluster around 3100 satoshis to be tagged. If, however, we break down and this move above range resistance was a fakeout, I would be looking for a weekly close below 1975 satoshis to open up a move back into the 200wMA, where I would look to buy spot with a hard stop below 1480 satoshis. Not much else to add here for now…
Price: $6.63 (30,620 satoshis)
Market Cap: $4.948bn
Thoughts: If we look at UNI/USD on the weekly timeframe, we can see that the pair looks to have formed a higher-low for now at $5.65, front-running the retest of the $4.75 level that I had been expecting following rejection up at $9.74. If we look at the daily for more clarity, price is starting to turn market structure bullish again off the higher-low. If we now see prior support turned resistance at $7.40 – confluent with the 200dMA – reclaimed as support next week, I would expect the pair to continue to push higher and make another attempt at the trendline above $10. Close the weekly above $9.87 and the trendline and we have weekly bullish structure and likely a longer-term reversal. If we fail below $9.73 and turn lower again, I am still looking at $4.75 to look for spot buys on UNI.
Turning to UNI/BTC, we are sitting above long-term trendline resistance and above reclaimed support at 29.5k satoshis, but below support turned resistance at 34.8k satoshis. If the pair closes below that former support level, I would expect demand to be found in the 26.3k-satoshi area, given the prior resistance in that area, but if that fails I think this begins to look like a false breakout – despite how long we have consolidated above it – and I would expect another 25% retracement from there towards 21k satoshis. If we look at the daily, we can see why 26.3k satoshis is really strong support, as it is also where the 200dMA is sitting following the breakout back above it. As such, I am a buyer at that level for a bounce play.
Price: $2.99 (13,820 satoshis)
Market Cap: $711.879mn
Thoughts: Looking at SNX/USD on the weekly timeframe, we can see that price continues to be capped by prior support turned resistance at $3.31, following a deviation above that level into a lower-high at $4.32, still capped by long-term trendline resistance. Price is now finding support around $2.62, above the historical support level at $2.37. Despite the downtrend still being intact here, we do have weekly bullish structure following the firm close above $3.31, even with it forming another lower-high below the trendline, and if the pair can continue to find support above $2.40, I think we are in for a higher-low and a cyclical bottom above that $1.41 swing-low from June. I am going to begin scaling into SNX this week below $3.31 with invalidation on a close below $2.10. I will add to my position above $4.32 and look to hold for a cycle.
Turning to SNX/BTC, we have spent almost a year now consolidating below the 200wMA, with divergence into the ultimate low at 8k satoshis that led to the most recent rally into and marginally above that 200wMA and support turned resistance around 17.5k satoshis. We have since rejected and move lower once again, and if price does drop off from here I would expect that 10k area to act as very strong support, where a higher-low may form and lead to the eventual move out of this range and above the 200wMA – likely next year. This is a long-term play for me and so I am happy to sit in it whilst it chops around below the 200wMA, with my invalidation clear on the Dollar pair.
Price: $0.297 (1372 satoshis)
Market Cap: $139.668mn
Thoughts: As LOOKS has only been trading since January, both pairs look very similar and so I will focus on LOOKS/USD here.
So, on the daily for the pair, we can see that price remains below long-term trendline resistance from the all-time high but has bounced off the all-time low at $0.16 and spent over 10 weeks since consolidating above it and below prior support turned resistance at $0.457. This is the sort of price-action I would expect from a cyclical bottom, particularly following at 97%+ drawdown. Even today, following a ~2x bounce of the all-time low, we are below a 95% drawdown from that all-time high. I am positioned in LOOKS from within this range and continue to buy incrementally within it, with my invalidation on a close below the all-time low. If we break higher from here and hold above $0.46, it looks like a cyclical bottom to me and I would expect the disbelief phase of a new cycle to begin, with no resistance all the way back into the 200dMA and prior support turned resistance at $0.84.
Price: $0.064 (293 satoshis)
Market Cap: $36.131mn
Thoughts: If we begin by looking at DG/USD, we can see that price rallied off the all-time low at $0.032 in June all the way back into resistance around $0.089 and has since broken down and retraced back below support at $0.073 into $0.052. Around that level, price consolidated for a week or so and has since broken higher, reclaiming $0.059 as support yesterday. This turned daily structure bullish and it is looking like a higher-low has formed, from which we are likely to tick higher once again and make another attempt at a breakout beyond $0.089. If we are able to break above that resistance, there is literally no resistance back into $0.17 except the untested 200dMA. I have been buying DG for a while now but following this move above $0.06 I am keen to add to my position, with invalidation now on a close below $0.05.
Turning to DG/BTC, we can see that price has been consolidating above key reclaimed support at 260 satoshis for two months now, and that level is key for the structure here. Lose it and I expect most of the rally off the all-time low to be unwound back towards 190 satoshis as the final support above that low. If, however, we do hold above it, I expect price to turn higher and tackle the 200dMA and 360-satoshi resistance sooner rather than later, with 435 satoshis the level just beyond that 200dMA that is capping price from a real run – above those three levels I think we enter disbelief for DG. But this could still take some time – I was expecting late Q3 and early Q4 to be prime time for entries and it is usually several months after those entries that we start to see real moves to the upside, so patience is still key here.
Price: $2.15 (9,920 satoshis)
Market Cap: $20.182mn
Thoughts: I was unable to find a chart for SpookySwap with the entire price-history, so we have most of it here from September 2021. Looking at both pairs, the price-action seems identical, so let’s look at BOO/USD:
If we glance at the daily for BOO/USD, we can see that the pair suffered at 95% drawdown from the all-time high, breaking below support at $3.12 in June, which led to the all-time low formation at $1.82. Price has since rallied back into that $3.12 level to retest it from below as resistance, with price rejecting a move back above it in mid-August, leading to the retracement we have seen since all the way back towards that all-time low, above which we hover for now. This is where I am looking to finally scale into a position in BOO, as it is a revenue-generating protocol with a low P/E and a heavy drawdown. I am looking to buy around $2 with an invalidation on a weekly close below $1.80, where I would then exit and wait for either a reclaim of that low or a new range to form before re-entry. I will be looking to hold this for a new cycle, which could yet be 12 months out from now.
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.