Market Outlook #203 (8th January 2023)
Hello, Happy New Year and welcome to the 203rd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, BNB, Uniswap, NEAR Protocol, Osmosis, SingularityNET and PirateChain.
In the next week or two, I’ll also be publishing a list of a handful of my favourite picks for the next cycle, so keep an eye out for that.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $326.126bn
Thoughts: If we begin by looking at BTC/USD on the monthly timeframe, we can see that December closed firmly below support turned resistance at $17.6k. The month saw declining volume following the November breach of support and, as one might have expected, this led to a month of consolidation for BTC/USD, with the monthly high poking above that resistance zone but failing to hold above it. Given how the year ended, with no impetus to break back above clean support turned resistance, I do still expect that $15.5k low to be taken out – it would make sense to me to wick below last year’s low before putting in a cyclical bottom. The good news is that I believe it is very high probability we do see this market bottom in 2023, so now it is a case of patience + where we see value. For some, that might be buying from now periodically for the rest of the year; for others, like myself, I would like to either see that low taken out and then look to get involved or wait for a monthly close back above $17.6k to confirm that level as reclaimed support.
Turning to the weekly, we can see here that price continues to consolidate in tight weekly ranges, with the 360wMA now aligning perfectly with that 2022 low around $15.5k. A wick below that level followed by a reclaim of the moving average would start to look like a bottom for me; obviously, a close below the level and rejection off it as fresh resistance makes that $13.9k level much more likely to hit, and that would be a blind bid level for me as we would have fully retraced the entire rally from November 2020. In that more bearish scenario, I think we form a new range between $12.2k to $13.9k for a few weeks and that marks out the bottom. Now, if we don’t even see the $15.5k level swept, which would surprise me, naturally the only path is upwards, which would see a weekly close back above $17.6k to reclaim that level as support. I would then expect to see price push on towards $19.7k and then form a higher-low above that $17.6k level to confirm that the low is in, following which I would be a buyer. This does not mean we should expect a rally like that of November 2020 to begin; if anything, we likely have many more months of chopping around below the 200wMA before we start to see any signs of the beginnings of the next cycle, but a high probability of limited downside is all I am looking for in order to allocate.
Finally, looking at the daily, we can see that volatility has all but disappeared over the past two weeks as volumes have decline, with price sandwiched between $16.1k as support and $17.1k as resistance. Wick above that top end into $17.6k and then reject and I think we have the impetus for that move lower into $15.5k and below. Conversely, if we fall off from here immediately through $15.5k and then close the daily back above it, I would look at that as a long opportunity back into $17.6k for the retest, then looking to hedge and reopen long exposure once we’re safely back above the level as reclaimed support.
Price: $1262 (0.0745 BTC)
Market Cap: $154.483bn
Thoughts: Looking firstly at ETH/USD, we can see from the weekly that price continues to chop around below the 200wMA, having recently formed a higher-low at $1155 but requiring a close back above $1370 to really confirm a shift in weekly structure back to bullish. If we wick above that $1370 swing-high and then close back below it, again that looks like a catalyst for a flush lower, which, if we turn to the daily, we can see has very clear targets. There is a double bottom at $1073 and a double bottom at $1000. If the 200MA continues to cap the ETH/USD highs and we do break down from that area, I think both these areas get run on a final flush lower. Given that we have also begun a new year, I would find it very strange if all of these equal lows were just left untapped with no clear yearly wick lower forming to provide the liquidity for a move higher. So, if we do wick higher into $1390 and then start to break down, I will be looking to fill shorts to hold for the coming weeks. If we don’t get that squeeze higher and just roll off a cliff here, I am not playing the short side, but would rather wait for $1000 to be flushed and reclaimed before getting involved.
Turning to ETH/BTC, this pair is looking fairly healthy all things considered, having spent the last couple of months consolidating in a pennant above the mid-range, with lower-high and higher-lows. The fact this support continues to be protected and that this past week has seen a push higher does put the momentum with the bulls for an upside resolution to this consolidation. In fact, if we look at the daily chart, we can see a clean breakout above the string of lower-highs, as well as a reclaim of prior support at 0.0729. Bulls want to see this support now hold as a higher-low, leading to a push into resistance at 0.0765. Beyond that high, I would expect the 2022 open to be taken out at 0.0795. Only if the pair now breaks back below 0.0729 would this look like a fake-out, from which we would expect at the very least a retest of 0.0698.
Price: $261.22 (0.01542 BTC)
Market Cap: $41.787bn
Thoughts: If we begin with BNB/USD, we can see that weekly structure is bearish following the lower-low below $254, with price wicking towards the May low at $210 but holding above it for now. We then saw the pair consolidate for two weeks before rallying this past week back above that $254 level. There is nothing yet that indicates a reversal, but the fact that price held above the May 2022 support and then consolidated back near the breakdown level (above which it now sits) is promising. If we drop into the daily, we can see that price has reclaimed that breakdown level. Now, if we wick higher into the $277 resistance area and then form another lower-high and start to turn lower, I would expect that $220 low from a couple of weeks ago to be retested, where we could then potentially see a bottom formation into $210 with some sort of exhaustion pattern on the momentum indicators. For now, I am staying out of BNB and waiting for a clearer picture.
Turning to BNB/BTC, we can see the last few weeks retraced most of the breakout rally to new all-time highs, with price bouncing off minor support just above the prior all-time highs and now turning higher once more. The trend is still pointing to higher prices, as is momentum, and so I think it is likely this just grinds higher into resistance at 0.0172. That would be the area I would expect a complacency high to form if this trend is ending, from which we’d see a breakdown and retracement back inside the prior all-time highs at 0.0125. Another possible scenario that would be a great opportunity for a synthetic short would be for the pair to grind to new all-time highs above 0.0197 and then reject and break lower, putting in divergence on the momentum indicators. I am keeping an eye out for that as I think that could be a high R short opportunity if it presents itself…
Price: $5.48 (32,320 satoshis)
Market Cap: $4.171bn
Thoughts: Beginning with UNI/USD, we can see from the weekly that the pair has been consolidating above support at $4.75 for months now, whilst putting in a lower high at $6.38. I would love to say that the bottom is in here and that we should be buying all the UNI we can, but weekly structure is still bearish here and there is a possibility that the lower-highs lead to a break below $4.75 – a close below which would be significant given how long the level had held. I would rather wait and see whether we get that downside break, in which case I am a big buyer of UNI at $3.50 or on a reclaim of $4.75. If we don’t get the downside break, I would rather see market structure flip bullish off this support by closing the weekly above $6.38, then look to buy a dip with invalidation below $4.75.
Turning to UNI/BTC, we can see that price has largely been range-bound between reclaimed support at 29.5k satoshis and resistance at 34.8k satoshis since November last year and, if we were to see the bottom of the range give way, I would expect demand to step in around 26.7k as key prior resistance turned support, so the downside on the BTC pair does appear fairly limited here (and thus why I have very little expectation of getting that $3.50 retest). Obviously, if 26.7k were to fall also, there is a huge gap to fill to the 21.4k support level, which obviously lends itself to the most bearish outcome on the dollar pair and the best opportunity for the next cycle. Assuming that does not happen, what I think we see from here is a sweep of the bottom of the range into 26.7k followed by a range reclaim, further consolidation and then an upside breakout above 35k, leading to a retest of the 41.4k prior support. Any close above that level and I think we’re in new bull cycle territory.
Price: $1.57 (9254 satoshis)
Market Cap: $1.323bn
Thoughts: If we begin by looking at the weekly timeframe for NEAR/USD, we can see that the pair recently broke below support at $1.51 to form fresh lows for 2022 at $1.25, where price consolidated at the beginning of the year and has since bounced off back towards the previous swing-highs and support turned resistance at $1.73. Despite this bounce, weekly structure is still bearish, so I would not be quick to step in here. Rather, if we see the pair continue to push higher, retracing this entire move lower to close back above $1.73, then I think this looks like a deviation and a possible bottom formation around historical support. From there, we’d want to see a higher-low form and look to buy that dip with $1.25 as invalidation, looking for a gap fill higher back into $2.66 as a first target. The one thing that really supports this as a probable outcome is the high-volume move off the lows following a two week period of declining volume as price moved lower.
Turning to NEAR/BTC, we can see that price bounced just above historical support at 7.1k satoshis and is set to close right at prior support ~9.2k. Reject here and I would expect 7k to be retested as support, where some sort of momentum divergence would be a nice indicator for a bottom formation. Alternatively, if there is strength here, we should see price close above 10.8k satoshis to turn weekly structure bullish and then dip lower to form a higher-low. Looking ahead, if the 7k support does not hold, I would like to get involved around 5.5k satoshis, as that has been significant historically for the pair. To the upside, the main resistance is naturally the pivot at 13k, which has been both support and resistance throughout price-history. Close the weekly above it and I think we are beginning a new trend higher.
Price: $0.72 (4240 satoshis)
Market Cap: $353.724mn
Thoughts: As Osmosis has only been trading for a little over a year, both pairs look virtually identical and so I will stick to the Dollar pair here for clarity.
Looking at OSMO/USD, we can see that price had formed a range during early trading between support at $4 and resistance at $6.70, above which price broke out to form a new range and new all-time highs at $11.30. That acted as range resistance, with $6.70 becoming range support, and since breaking back below $6.70 in April last year the pair has retraced 94% from the ATH into an all-tine low at $0.68 – a level which initially held in June but following a couple of months of trending higher into $1.77 has since been retested. Price at present is consolidating between that all-time low as support and prior support turned resistance at $0.74. This low has held for 204 days and this would historically present the point of maximal opportunity for an altcoin. However, with macro conditions still pointing to some downside, and a high probability of at least a sweep of this low before a bottom forms, I am holding off for now. I would like to see $0.68 taken out and then demand step in and reclaim the low as support, which will be my signal to jump on board and hold for the next cycle.
Price: $0.0706 (419 satoshis)
Market Cap: $81.014mn
Thoughts: Beginning with AGIX/USD, we can see from the weekly chart that price has retraced almost 95% from the September 2021 highs at $0.65, finding a low in July at prior support around $0.035. Since, the pair has been consolidating for 175 days above this support level, range-bound by resistance at $0.071. Any break and close through that range resistance would look to me like emergence from an accumulation range, with weekly structure turning bullish and momentum beginning to point higher. I would look to buy AGIX in this scenario with invalidation at $0.034 (yes, 50% of downside), but with a view to hold for the next cycle, and thereby an upside target of at least $0.26, followed by a retest of 2021 highs around $0.60-$0.65.
Turning to AGIX/BTC, we can also see confluence for a bottom formation with the all-time lows having held as support, and the July low floating above them with price then consolidating for months above reclaimed support at 215 satoshis, now set to close the week above prior support at 366 and the 200wMA. This very much looks like emergence from depression into disbelief and I would like to see the pair squeeze higher into 550 and then form a higher-low above the 200wMA. Not much else to add here – this one looks primed.
Price: $0.338 (2033 satoshis)
Market Cap: $67.126mn
Thoughts: If we look firstly at ARRR/USD, we can see that price formed its all-time high in April 2021 just shy of $17 and has since retraced 98% over the course of almost two years, with the last six months of this bear cycle occurring on significantly diminished volatility, as you can see on the chart. Since breaking below $0.56, the price-action has been lethargic, bleeding lower very slowly since July and now sitting just above historical resistance turned support at $0.30. I think ARRR has fundamental qualities and that privacy will re-emerge as a sector of note in 2023, and so I am looking to build a long-term position here, buying incrementally lower from here if we continue to fall until I fill a 2% allocation. This will be a moon or die type of play – either ARRR withers into irrelevance and I lose my 2%, or we see another speculative cycle like 2021 and retest – at the very least – $1.85, followed by $4.60 and followed by euphoria above that if we get anywhere near the previous all-time highs, although I do think that is unlikely given the extent of that previous cycle’s juice. Nonetheless, I think ARRR is good for a few multiples in the coming months and I am keen to invest in good privacy tech.
Turning to ARRR/BTC, the only thing I really need to say here is that following a textbook bear cycle with each stage so clearly presented, we have now been sitting above support at 1600 satoshis for over year, with the last four months spent sandwiched between it and 2350 satoshis as resistance. The only thing that would convince me that ARRR is never having a speculative cycle again and is likely dead would be if the 1160-satoshi support were to fall – the resistance that preceded the parabolic run to all-time highs. Below that, there isn’t really an important support level except the all-time lows. On the daily, we can also see that the 200dMA and 360dMA have now totally flattened out, as one expects of the bottom end of bear cycles, and so I am very much going to be getting involved here and as price moves lower, if it does.
And that concludes this week’s Market Outlook.
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