Market Outlook #194 (9th October 2022)
Hello, and welcome to the 194th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Aave, Fantom, Ethereum Name Service, Render, LYXe and UFO Gaming. Many of these have been subscriber requests this week, which is always more interesting for me than my own picks.
As ever, if you have any requests for next Monday’s Outlook, do let me know.
Bitcoin:
Monthly:
Weekly:
Daily:
Price: $19,516
Market Cap: $373.618bn
Thoughts: If we begin by looking at the monthly chart for BTC/USD, we can see that September closed marginally red, having wicked through the August and July lows but closing back above them, right around $19.4k. The $17.5k swing-low continues to be protected and last month was primarily a period of consolidation, with much of the price-action occurring right around that prior all-time high zone. Volume picked up on the previous month but price was still unable to break $17.5k, which is promising short-term for bulls. From here, I would expect October to see some relief, as long as that $17.5k swing-low continues to be protected, and I would be looking at any sustained above above $20.5k on the lower timeframes to lead to the top of the range at $25.4k being retested as resistance, or at the very least last month’s high being swept. To the downside, the only major monthly level we have below $17.5k remains that $13.9k prior resistance.
Dropping into the weekly, we can see that price is still being capped by local trendline resistance from the last push towards $25k, and this past week has seen price take out the prior weekly high into trendline resistance around $20.5k and reject, now set to close the week closer to the general support zone around $19.5k. Whilst this attempt at a trendline breakout was slapped down, we continue to hold above key support levels for now, and so I would expect to see next week take another crack at that $20.5k level, if only to sweep a few of the clean highs on the lower timeframes before potential downside. Unless we close next week above the trendline and $20.5k resistance, I expect the relief to be limited – close above it and we’re likely heading above $22k to retest that resistance cluster.
Finally, looking at the daily, if we break and close above trendline resistance and the $20.5k level (or wick through that zone) and break back below $20.5k, I would be looking to exit the spot I bought around $18.8k and look for shorts, as we would have a deviation above key resistance and subsequent rejection, making it likely that we take another stab at the bottom of the range. Until we start closing the daily back below $18.6k, I think the range continues to hold and we just crab onwards – close below that level and I would expect the $17.5k low to give way. For a longer-term bull case, I’d want to see price sustain above $20.5k and reclaim that area as support, then moving back above $22k, which opens up that $25.4k prior support retest over the coming weeks.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1324.45 (0.06788 BTC)
Market Cap: $162.457bn
Thoughts: Beginning with ETH/USD, we can see on the weekly that price continues to consolidate around the 200wMA and prior resistance at $1287, which means I am still not keen to look for shorts on major support. If we lose that support zone this week and close below $1216, I am looking to short the pair down into $1000. Pretty straightforward. We have got weekly bearish structure here to support the case for further downside, but if BTC does squeeze upwards next week, it is likely ETH also pushes up into that $1416 level that continues to cap price, where any weekly close above that reclaims the breakdown level as support and opens up a much deeper squeeze towards $1560. Dropping into the daily, we can see that price has been trapped between $1216 and $1416 for the past two weeks at this point, and until we get a sustained move to either side of that range there isn’t a great deal else to say on the pair.
Turning now to ETH/BTC, this week has seen price rally marginally off the weekly open back towards that mid-range, but weekly structure is still bearish, momentum is pointing lower and the mid-range is still capping price, so it is too early to expect a reversal in fortunes for ETH, in my opinion. If we can break higher from here next week and reclaim 0.0687 as support, then we can start looking at higher targets, but until then it just looks like we’re chopping around below key resistance with a market structure break, and thus I still expect to see the bottom of the range traded from here back below 0.06. Turning to the daily, I have marked out that breakdown level at 0.0723, as I expect any squeeze to the upside to be capped by that level. If that level is reclaimed as support, we’re headed back to the top of the range. The more likely scenario for me is that 0.069 caps price and we break below 0.0668 as support, then leading to another leg lower towards the bottom of the range.
Aave:
AAVE/USD
Weekly:
Daily:
AAVE/BTC
Weekly:
Daily:
Price: $75.82 (0.00388 BTC)
Market Cap: $1.069bn
Thoughts: If we begin by looking at AAVE/USD, we can see from the weekly that price has been consolidating above the May low, having rallied off the June low into the 200wMA to retest it as resistance, from where price rejected and returned towards the $70 area, above which it is currently sat. The May low sits just below at $62, and this is the level I would expect price to return to to retest as support before the cycle has fully bottomed out, but the $50 area I do expect to be protected. If we drop into the daily, we can see that price continues to be capped by the 200dMA also, and that structure is firmly bearish here, so if we break below $70 I would then expect a return to that May low, where I would look to be a buyer around $62 with invalidation on those buys on a move below $49, as marked out on the chart.
Turning to AAVE/BTC, we have been consolidating above the 200wMA for months now, with price having recently broken below the tight consolidation range between 0.00343 and 0.00393, now chopping around just below it. If we drop into the daily for clarity, we can see that the 200dMA and 360dMA have now begun to flatten out and converge, as is often the case with cyclical bottoms in altcoins as volatility diminished, and price is now holding above minor support at 0.00365 and major reclaimed support at 0.00343. I would expect to see that latter level hold as support here, but if it fails it is likely that we move 20% lower from there into the prior support level at 0.00285. Until the pair is back above 0.0055 I don’t expect to see a cyclical reversal play out, but a confirmed break above that level looks like disbelief to me and I would look to add to my AAVE holdings.
Fantom:
FTM/USD
Weekly:
Daily:
FTM/BTC
Weekly:
Daily:
Price: $0.22 (1137 satoshis)
Market Cap: $564.371mn
Thoughts: Beginning with FTM/USD, we can see on the weekly timeframe that price has broken below the May low at $0.24 and price is now consolidating below it but above the June lows and above the previous range lows at $0.15. Trendline resistance continues to cap rallies and the 200wMA acted as very strong resistance on the first test from below. From here, one would expect to see price continue to chop around these lows but likely wick below $0.15 before a cyclical bottom forms, then any move back above the level and through that trendline resistance would confirm a bottom for me. If we drop into the daily, I have marked out how this might look, where we may either see $0.15 protected and front-run for a bottom and then price continue to consolidate for weeks through the trendline before turning higher when the macro picture looks more positive for speculation, or we see a wick through $0.15 and price close back above. Either way, I think buying Fantom as close to $0.15 as possible makes sense to me, as invalidation is very clean on a close below that level, as the next major support is all the way down at $0.06.
Turning to FTM/BTC, we can see that a bottom already appears to have formed with price having rallied off the June lows through trendline resistance, rejecting at reclaimed resistance at 1750 satoshis and since trendline lower but holding firm above the 200wMA, and well above those June lows. Again, dropping into the daily for clarity here, if we do break lower and continue to bleed, that 900-satoshi area would be prime for buying for me as untested support, with invalidation on a close below the June low. if the 200wMA holds as support here, we likely just continue to chop above those lows until the tide turns, where any move through 1750 is the clearest signal I can see for a sustained reversal.
Ethereum Name Service:
ENS/USD
Daily:
ENS/BTC
Daily:
Price: $17.61 (90,120 satoshis)
Market Cap: $356.612mn
Thoughts: Looking firstly at ENS/USD, we can see that price has been trending higher since retesting $11.80 as support, rallying into resistance at $16.60, forming a higher-low above $12 and then rallying through that resistance over the past week into $18.60, below which it is currently consolidating. I would expect price to break through this level on the next attempt (particularly given how the BTC pair looks) and then to continue the trend higher into $21 as minor resistance, where we likely take a breather. However, looking at this, there is no major resistance until the cluster between $24.30 and $28.70, which is where I expect to see the pair trend towards and where we are likely to form more of a local top. I would be looking to long this on any dip back into $18.60 next week if it can rally through it towards $21.
Turning to ENS/BTC, building on what was previously mentioned, we can see a parabolic rally beginning to play out, particularly following the reclaim of 79.7k satoshis as support, with minor resistance overhead at 98.7k the only real level to clear before no resistance all the way into the December 2021 high at 0.00154. This could get ridiculous quite quickly with so little overhead resistance, and so I am very keen to add to spot holdings on any dip that is given. Until we break this parabola, ride the trend higher.
Render:
RNDR/USD
Daily:
RNDR/BTC
Daily:
Price: $0.47 (2421 satoshis)
Market Cap: $119.798mn
Thoughts: I will focus here on RNDR/USD, as the two pairs have been looking virtually identical since December 2021.
Looking at the Dollar pair, we can see that price has trended lower since December, forming an all-time high late in November at around $8.30 and losing 96.6% of its value over the following months into the June low at $0.28. This low found strong support and produced a v-reversal back into prior support turned resistance between $0.57-$0.68, where price rejected but then consolidated above support at $0.43, before rallying again through that resistance zone into $0.85, which became a deviation and led to a breakdown back below $0.68 as range resistance. Since then, the pair has bled lower, back into the $0.43 support level, above which it has been consolidating for a couple of weeks now, and I am keen to be a buyer here with invalidation on a close below the level, as any breakdown below $0.43 will likely lead to the all-time low being retested at $0.28, which – if it comes – would be where I want to re-enter long exposure. If the pair can close above $0.85 in the coming weeks (or months, if it takes that long), that will be my disbelief indicator and I will be looking to add heavily upon that confirmation and hold for the next cycle.
LYXe:
LUKSO/USD
Weekly:
Daily:
LUKSO/BTC
Weekly:
Daily:
Price: $4.77 (24,460 satoshis)
Market Cap: $72.589mn
Thoughts: If we begin by looking at LUKSO/USD, on the weekly timeframe we can see a really beautiful example of textbook altcoin cycles: price rallied in May 2021 off the range lows at $4.05, through the prior all-time high at $27.35 into a new ATH at $47, leading to a new cyclical top and reversion all the way back into $4.05 in May 2022, with price then deviating below that low into $3, before reclaiming $4.05 as support and now consolidating above it. This looks like a clear cyclical bottom to me following that deviation and I am a buyer of LUKSO here and into $4, where I would look to exit spot below $3, as the next major support is down at $1.64. I will be looking to hold LUKSO for the next cycle, likely looking to offload much of my position back at the top of the range near $27. This may well take 12-18 months to play out but these are the sort of opportunities I have been waiting for.
Turning to LUKSO/BTC, the picture is very similar, with price having bounced off historical resistance turned range support at 13,400 satoshis in June and rallied all the way into reclaimed resistance at 30.8k, before falling off and bleeding back into reclaimed support at 22.8k, above which it has been sat now for several weeks. Whether this level holds or not, we have more support just below at 20k satoshis and I would expect to see this general area of support now hold for the pair, where if it were to break below 20k, we’ve got 15-20% more downside before the next support level comes in. Either way, I am more focused on the dollar pair here given how clean the structure is for my longer-term spot positioning.
UFO Gaming:
UFO/USD
Weekly:
Daily:
Price: $0.00000207 (0.000000001566 ETH)
Market Cap: $53.146mn
Thoughts: I have only included the Dollar pair here for UFO given the unusually high supply which renders the BTC pair useless for charting purposes, but given that the Dollar pair is what I tend to focus on for these sorts of tokens since the creation of stablecoins, it’s not such a problem.
So, looking at UFO/USD, we can see a textbook altcoin cycle, with price very much now in the depression phase of that cycle, having bottomed out marginally above the all-time low, rallied off that support base into reclaimed resistance around $0.0000065, then returning to the support base now for re-accumulation. This is exactly where I want to be a spot buyer, with price still 96% drawn down here from that all-time high and volatility diminishing inside this range. If we look at the daily, I have marked out what I would expect to see over the coming weeks and months, as the 200dMA continues to flatten out and volatility continues to diminish into support, leading to disbelief once price breaks and closes back above the August high at $0.0000065. I will be looking to hold this position for the next 12-18 months, most likely. This is a fixed-risk play for me, where I already own some spot but will be looking to add until we hit 3% capital deployed, with no invalidation – moon or die.
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.
