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Market Outlook #193

Market Outlook #193 (2nd October 2022)

Hello, and welcome to the 193rd instalment of my Market Outlook.

In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Polygon, Uniswap, Algorand, Axie Infinity and Magic.

As ever, if you have any requests for next Monday’s Outlook, do let me know.

Bitcoin:

Weekly:

btcusdweekly

Daily:

btcusddaily

Price: $19,211

Market Cap: $368.226bn

Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price is set to close higher off the weekly open on increased volume, remaining firm above that $18.7k support level for the time being. We did see price wick higher earlier in the week up towards $19.8k, but this move was rejected and price has returned back towards the support base. That being said, the fact that we still cannot break the lows even with rising volume and with equities making new lows (though diverging on momentum) suggests to me that we may yet see more relief this coming week, particularly given we are now in the final quarter of the year. Even if we are to see price break lower going into 2023, it is likely we put in a quarterly high somewhere beyond this week’s high, if only to trap late longs into resistance. If we do start to push higher next week, I would be looking for a breakout beyond trendline resistance that leads to the $21.8k resistance area being retested, which is where any long exposure would likely be wise to hedge. In that scenario, we have a trendline breakout which would bait longs right into that resistance cluster, from which point we may well finally see that $17.5k swing-low taken out. Either way, I have bought spot BTC down here this week with invalidation below last week’s low and looking for that $21.8k area.

Dropping into the daily, there’s not a huge amount to add here except that we have a very choppy minor uptrend off that $18.1k sweep and any pull-back into $18.7k from here should be protected hard; if we start to close the daily below it, I will be exiting spot and awaiting another leg lower into $17.5k and below. If, however, $18.7k does act as support again this week, we have a couple of wicks up into that $20.6k area – right near trendline resistance – which are prime for taking out. Break and close above there and the next target becomes $21.8k. Only in the scenario that we get a weekly close above $22k would I be looking for any further relief from there towards $24.5k – in all honesty, I do still feel that relief will be short-lived, particularly if the equities momentum divergence does not play out and they continue to puke.


Ethereum:

ETH/USD

Weekly:

ethusdweekly

Daily:

ethusddaily

ETH/BTC

Weekly:

ethbtcweekly

Daily:

ethbtcdaily

Price: $1,294.90 (0.06745 BTC)

Market Cap: $158.785bn

Thoughts: Beginning with ETH/USD, we can see from the weekly that we are set to print an inside week, with all of this week’s price-action having occurred within the range of the previous week, consolidating right around the 200wMA. As such, if we take out this week’s low at $1250 early in the week and then close back inside the range, I would be looking for the top end of the range at $1400 to be taken out next, with the likelihood being that we see a further squeeze through that level towards $1560. The opposite applies if we take out the weekly high early and then close back inside the range, where $1215 and lower is on the table. Until we see a weekly close below $1215, however, I am loathe to take out any short exposure here right at this key MA and prior resistance; if we do lose the level, then it becomes favourable to short towards $1000. Dropping into the daily, we can see that structure is firmly bearish here, with prior cycle highs acting as resistance on the most recent retest. As such, if we do close below $1215, I really like that for momentum lower into that clean double bottom at $1000. If, however, we close the daily back above it, we have a really nice long opportunity towards $1560 as the next resistance.

Turning to ETH/BTC, we can see that the mid-range at 0.0687 is not really acting as strong support here, despite consolidation last week around the level. This week we have sold off a little from the mid-range and are trading below it into the close, following a weekly market structure break. As such, I do not like the idea of being exposed to ETH to the long side for any prolonged period of time, as I would expect the pair to fall off towards reclaimed support around 0.059. If we drop into the daily, I am looking at two possible scenarios here, with price finding support at 0.0642 and then rallying back into the mid-range to retest it as resistance, or price losing that level, from which we likely see momentum pick up all the way back into the bottom of the range.


Cardano:

ADA/USD

Weekly:

adausdweekly

Daily:

adausddaily

ADA/BTC

Weekly:

adabtcweekly

Daily:

adabtcweekly

Price: $0.43 (2216 satoshis)

Market Cap: $14.573bn

Thoughts: If we look firstly at ADA/USD, on the weekly we can see that price is flirting with that all-important $0.42 support, which has held since May. We are very close to closing the weekly below it, and if that occurs next week, we have two possible scenarios: a bear trap, where price then reclaims the level, trapping breakout shorts, where we can then look for a bounce back towards $0.54; or a legitimate breakdown, where we would then likely see the next few weeks lead to significantly lower prices, where $0.27 is minor support, and $0.20 is major support below. In the latter scenario, I will be looking for opportunities to sell rallies all the way into that level.

Turning to ADA/BTC, this pair does look markedly better than the Dollar pair, where we continue to consolidate within the range between 2100 satoshis and 2450 satoshis, and whilst price remains above 1980 satoshis I think a fake-out below $0.42 is more likely than a legitimate breakdown and subsequent 50% drawdown. If we do break 1980, then we’re going back to 1500 satoshis most likely, which is where that larger drawdown on the Dollar pair comes into play. Whilst the pair is consolidating within this range, however, there is not a lot else to discuss, but if we get a combination of a bear trap / swing failure on the dollar pair and then the BTC pair closes above 2500 satoshis, I think the picture changes quite drastically and Cardano begins to look attractive for the mid-term.


Polygon:

MATIC/USD

Weekly:

maticusdweekly

Daily:

maticusdweekly

MATIC/BTC

Weekly:

maticbtcweekly

Daily:

maticbtcdaily

Price: $0.78 (4039 satoshis)

Market Cap: $6.761bn

Thoughts: Beginning with MATIC/USD, we can see that price is currently trending lower off prior support turned resistance below $1, but remains above trendline resistance, now acting as support, and well above the reclaimed support base at $0.60. If we drop into the daily for more clarity, we can see that the 200dMA is also capping price, leading to lower highs and lower lows off the $1 resistance, and confirming bearish market structure. If we push off into that 200dMA again, I would look for short opportunities towards $0.74 as minor support. Until the pair is cleanly back above $1, I am not looking for longer-term long exposure on MATIC. That is unless we see a retracement back into that $0.50-60 area, where I would look for signs of seller exhaustion and a potential macro higher-low, but that is likely still weeks away if we do break lower from here. I am eyeing up that 200dMA short, however.

Turning to MATIC/BTC, we can see that price continues to consolidate below the mid-range at 4300 satoshis and above prior resistance turned support at 3650 satoshis, as it has done for three months now. Similarly to ADA, unless we see a break and close below that range support, it is unlikely we see much lower prices on the dollar pair, but if that level does go, the 200dMA and 360dMA are sat right below it, so this is a very messy area to be looking for longer-term short exposure, in my opinion. In the event that we see price break and close above 4700 satoshis and the Dollar pair reclaim $1, I am all aboard the MATIC train.


Uniswap:

UNI/USD

Weekly:

uniusdweekly

Daily:

uniusddaily

UNI/BTC

Weekly:

unibtcweekly

Daily:

unibtcdaily

Price: $6.24 (32,470 satoshis)

Market Cap: $4.758bn

Thoughts: Beginning with UNI/USD, we can see from the weekly that the pair appears to be forming a swing-low above resistance turned support at $4.75, having formed a low at $5.06 last week and then rallied off this week’s open into resistance at $6.37, around which it is set to close. Whilst we do remain below key resistance here and weekly structure is still bearish, the pair is refusing to break much lower than the $5.60 area at present, having only swept it briefly last week before immediately reclaiming it. If we continue higher from here, bulls want to see a close above $7.40 to turn weekly structure bullish, from which it is likely we squeeze higher towards both long-term trendline resistance and the highs around $9.74. If bulls are unable to break $7.40 and the pair turns lower, I would be looking for demand to step in once again around $4.75, where I would be keen to add to spot holdings. If we lose $4.75, I am out of my position and will be looking to re-enter back near the May lows, but I’d be (pleasantly) surprised if we get that opportunity again.

Turning to UNI/BTC, the pair still looks strong here to me, having reclaimed support at 2940 satoshis this week and rallied into prior support turned resistance at 3480. We are looking at what appears to be a higher-low following the long-term trendline breakout, and if we see continuation next week back above 3500 satoshis, I would be looking at 4140 next as major resistance, where the 38.2% retracement of the entire bear market also sits. Above that, it looks like a new cycle has begun, but whilst we remain below that area it is still possible we sweep and reject and then return back towards the 2625 satoshi support area. If we drop into the daily, we can also see that price is back above the 360dMA and that both the 200dMA and 360dMA are sitting right around that 2625-2950 range that is pivotal for bullish momentum here. Lose that entire cluster and I think we have 20-25% of downside back towards 2140. But UNI does indeed look better than most here…


Algorand:

ALGO/USD

Weekly:

algousdweekly

Daily:

algousddaily

ALGO/BTC

Weekly:

algobtcweekly

Daily:

algobtcdaily

Price: $0.36 (1895 satoshis)

Market Cap: $2.521bn

Thoughts: Beginning with ALGO/USD, we can see that price broke higher last week off long-term support around $0.30, closing up near $0.39 and confirming a weekly structure shift on good volume. This past week has seen the pair retrace into support at $0.34 and hold above it for now, which is promising for bulls. As long as that level now acts as a higher-low, it is likely we see ALGO squeeze higher into the major resistance cluster around that $0.50 level. Lose $0.34 this week and this will look like a failed breakout and I would expect a return to the support base at $0.30. Looking now at the daily, we can see this more clearly, where a swing-low has formed above $0.34, marking out that higher-low, but price has also got to now contest potential reclaimed resistance at $0.38 early this coming week, where any rejection from that level makes the $0.41 high look like a deviation, and I would look for intraweek shorts back towards $0.30. Break and close above $0.38 next week and I think we’re clear for a move into the 200dMA and $0.50 region, from which price will either reject and return to $0.41 or consolidate and continue to squeeze higher into $0.67 if a longer-term reversal is underway.

Turning to ALGO/BTC, we can see that price has close firmly above trendline resistance on this pair following last week’s rally, and this past week has retested the breakout area as support, holding above it for now. Continue to hold above 1700 satoshis next week and I think we are clear for a move into 2650 satoshis as the next major untested resistance level. If we drop into the daily, we can see that price is currently capped by the 360dMA and reclaimed resistance around 2050-2200 satoshis, so any daily close above that latter level opens up that squeeze into 2650. For now, ALGO looks like one to keep a keen eye on, as there are multiple clean setups that could play out over the next couple of weeks, regardless of direction.


Axie Infinity:

AXS/USD

Weekly:

axsusdweekly

Daily:

axsusddaily

AXS/BTC

Weekly:

axsbtcweekly

Daily:

axsbtcdaily

Price: $12.38 (64,500 satoshis)

Market Cap: $1.028bn

Thoughts: Beginning with AXS/USD, we can see that that price has been range-bound between support at $11.80 and resistance at $16 for the best part of 15 weeks, and price is currently sat right at that range support level. If we look at the daily for clarity, we can see that price is sitting on a 93% drawdown from the all-time high and momentum and volatility are declining into that support level, with daily ranges now very small. I am keen to be a buyer of AXS here, given the clean invalidation on a close and breakdown below $11.80, as the next major support below it is down at $6.55. For a project that continues to have ~700k active users, down from a peak of ~2.4mn, I am happy to buy a 93% drawdown and a 15-week range. If we do lose the support level, I will look for re-entry on a reclaim or all the way down at $6.55.

Turning to the BTC pair, we can see that this has been range-bound for 20 weeks at this point, sitting firmly above support at 55.8k satoshis for most of that time, with reclaimed resistance at 90k satoshis acting as the top of the range since May. If we drop into the daily, we can see that volatility continues to decline above this key support and the 200dMA is also beginning to flatten out, which is what we usually see as altcoins hit their depression phase of the bear cycle, which is when we most want to be buyers. This provides confluence to my long exposure here on AXS, but I am focused on the Dollar pair for invalidation. Nonetheless, the BTC pair does indeed look to have bottomed out here.


Magic:

MAGIC/USD

Daily:

magicusddaily

MAGIC/BTC

Daily:

magicbtcdaily

Price: $0.325 (1689 satoshis)

Market Cap: $56.509mn

Thoughts: As MAGIC has only been trading since late November last year, both the Dollar and BTC pairs look identical, and so I will focus on the USD pair here.

Looking at MAGIC/USD, we can see that price has drawn down 96.6% from the all-time high since February, bottoming out at $0.21 in mid-June, marginally above all-time lows at $0.19, and has since rallied all the way into trendline resistance at $0.96 before retracing the bulk of that rally back towards support here at $0.29. If this minor support level fails, it is very likely we return to test the bottom of the range, which is where I would like to be a buyer, where any swing-failure of the all-time low is a strong trigger for entry, or a close below and subsequent reclaim of the range. I would then want to see the pair continue to consolidate above $0.21 for confirmation, and then look to add to my position. If we do not get that opportunity at range lows, I will instead be looking for daily structure to shift, which here at present would be a close back above $0.37. If we see that, I will be getting involved with invalidation at $0.29.

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.


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