Market Outlook #211 (12th March 2023)
Hello, and welcome to the 211th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Polkadot, Algorand, Fantom, Osmosis, Oasis Network and Merit Circle. I will also be taking a deeper look at market cycles.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $395.965bn
Thoughts: If we begin by looking at BTC/USD, on the weekly timeframe we can see that this past week has seen price break lower, running through the swing-low at prior resistance turned support ~$21.5k all the way into $19.6k, where it appears to have bounced at both prior cycle highs and the retest of the trendline breakout as support. From here, we can likely expect something of a weekly structure break on a close below $21.6k – the reason I say something of is simply that it’s not the most clear swing-low to use for structure; despite that, it is right around that level of prior resistance that preceded the capitulation candle into $15.5k, so hold this $19.7k-$21.5k range as support rather than turning $21.5k to reclaimed resistance and breaking back inside $19.7k is critical for bulls, in my opinion. If we do break and close back below $19.7k, the last chance saloon for a continuation of this bottom formation is to hold $18.2k as support – lose that and I think we, at the very least, wick through $15.5k towards $13.9k before a bottom is found. However, if we do hold $19.7k this week and end up closing next week back above $21.5k, I would remain bullish short-term and expect to see another crack at $25k in April, where any weekly close above that opens up that move to retest the $29k untested support turned resistance. Despite all the hysteria of the past week, this still looks nowhere near as bad as it did back in November.
Turning to the daily, we can see that price is also stalling right around the 200dMA, having taken out all of the liquidity around the unswept lows since breaking back above the 200dMA. This may well be all the liquidity we need for that push higher into $25k and beyond, but naturally it will also depend on sentiment around legacy markets. More specifically on BTC, if we take out the $19.5k weekly low next week through the 200dMA and then catch a bid and close back above it, that looks to me like acceptance of the 200dMA as support and thus I would expect price to reclaim $21.5k as support over the coming week or two – close above that and I think the 360dMA at $24k gets closed above for the first time since April 2022 and price continues higher from there in April and May towards $29k. If, however, we reject at $21.5k and break below the 200dMA after the rejection, I would expect that $17.6k-$18.3k range to be tagged as the final chance of the cycle low already being in…
Price: $1,467.13 (0.07144 BTC)
Market Cap: $179.467bn
Thoughts: Beginning with ETH/USD, we can see from the weekly that price broke below range support at $1510 and through the 200MA and prior cycle highs around $1430 into $1370, where the pair caught a bid and is now pushing back above the 200wMA. If we can close the weekly back above $1508, that would be a very different picture indeed to what was expected as we went into the weekend, and I would consider that a rejection of a move below prior cycle highs and a confirmation of $1508 as strong range support. From there, we would want that level to act as support next week and then price to make another attempt at a trendline breakout later in March. If, however, we close firmly below $1508 and reject it early next week as fresh resistance, I would expect to see price move lower, back towards $1295 as a first target; if that level gives way, I think we take out all the week support below that into the clean double bottom at $1073 – which, if we do sweep, also would not then surprise me to clear out the clean bottom at $1000 before finding a higher low above $882. However, for now, 200wMA, 200dMA and prior cycle highs are acting as support and there is no reason to expect another 40% decline from here at present; rather, I would want to see this week’s low closed below before flipping bias.
Turning to ETH/BTC, strangely enough despite the panic of last week, the pair is set to close higher than the prior three weeks, which is indicative to me of strength in the market here, not weakness. If ETH/BTC can close back above 0.073 on the daily – where the 200dMA also sits- I would expect a push into resistance at 0.0765, followed by a retest of the 2022 open at 0.0796. Finally, some movement.
Price: $5.49 (26,661 satoshis)
Market Cap: $6.387bn
Thoughts: Looking firstly at DOT/USD, we can see that price faked out above resistance at $6.88 and then rejected, reclaiming that level as resistance and retracing through support at $6 into $5.15 as this week’s low. Now, we are still very much showing bullish market structure here on the weekly following the trendline break, and now the question for me is where do we form a higher-low from which to emerge into that more recognisable disbelief rally through $7.90? If we drop into the daily, we can see that price is currently pinned hard by steep trendline resistance but that price has found support at a prior support level around $5.34. If we hold this level and break through trendline resistance, I want to see price back above the 200dMA and prior support turned resistance at $6 before getting too excited; that would be my signal for a higher-low being in and price would likely take another stab at $6.88 reclaimed resistance from there, followed by the $7.94 swing-high. Above that and the trend has changed long-term, in my opinion. On the bearish side, assuming we reject any attempt at a move back above $6, I would expect to see that $4.21 current cycle low swept before any meaningful long-term reversal.
Turning to DOT/BTC, we can see that price has been largely range-bound for 300 days but 2023 has seen price break the May 2022 low at 27k satoshis, range above it for several weeks but below support turned resistance at 31.5k, and then wick through all of the lows of the past 300 days this week into 25k satoshis, where it found support. If this support holds and we reclaim 27k as range support, I think the bottom is very likely in, even if we need a couple more months of consolidation below 31.5k before the pair emerges. Once we close the weekly through that level, I think the next bull cycle begins for DOT and I’d be looking at the 40.5-43k range as the first major resistance.
Price: $0.188 (909 satoshis)
Market Cap: $1.334bn
Thoughts: Beginning with ALGO/USD, we can see that price rejected prior support turned resistance at $0.275 and has turned lower, breaking below $0.215 towards $0.18 this week, remaining marginally above the December lows at $0.162. At the moment, this is not looking like strong support – with structure firmly bearish here on the higher timeframes, I would expect the $0.162 low to be swept and reclaimed before a longer-term bottom is found. If, however, we do mark out a higher-low above it over the next couple of weeks, I would want to see $0.28 cleared before considering any long exposure, where weekly structure turns bullish. If we see that, I would be convinced that we have found our cyclical bottom. But that is likely still many weeks away… If we look at the daily, we can see that price also rejected with a double top at the 200dMA, which also capped price is November besides a small fake-out, so any clearance of that MA and turning it to support would be a strong signal for a reversal.
If we turn to ALGO/BTC, we can see that price is still very much below long-term trendline resistance, with bearish weekly structure and looking to close this week at fresh lows below the December low at 970 satoshis. If we do close below this level, I expect most of this wick, if not all, to be filled in towards the all-time low, as there is no real support down here. The bullish alternative to this would be to close below 970 and then reclaim the level next week with bullish divergence, which is very much possible. In that scenario, I am a buyer in early April. If the bearish scenario plays out, I am a blind buyer at 700 satoshis. Not much more to add here…
Price: $0.33 (1646 satoshis)
Market Cap: $942.058mn
Thoughts: Beginning with FTM/USD, we can see that price rejected at prior support turned resistance at $0.64 and has since lost the 200wMA reclaim, now returning to reclaimed support above $0.29, where the pair has found support. Weekly structure is still bullish despite the loss of the 200wMA and I would expect to see a higher-low begin to form over the next couple of weeks, with Fantom quite clearly – at least at present – appearing to be a little further ahead in its market cycle than much of the market. If we do start to mark out that higher-low above $0.29, or even the level below at $0.24, I think the next few months will take the pair into the major resistance cluster around $0.98. Dropping into the daily, we can also see that price has found support above the 200dMA, which is very promising given how long it has capped price prior to 2023. Reclaim resistance at $0.43 (and the 360dMA) as support and I think the next leg of the bull cycle begins.
Turning to FTM/BTC, we can see that price has retraced back towards the breakout resistance turned support at 1500 satoshis, sitting marginally above it at present, right around prior resistance at 1700 satoshis. This is a classic throwback following a breakout above a key historical level, and I would expect to see price begin to form a bottom above here; at the very worst, I would expect to see trendline support below 1500 satoshis to hold the trend. From here, I am looking for a weekly close above 2600 satoshis in Q2. If we turn to the daily, we have retraced right back into the 360dMA as support, having rallied well beyond it earlier this year, with the 200dMA also just below as confluence for this support zone. I find it high R to look for long exposure here with invalidation on a close below trendline support.
Price: $0.81 (3923 satoshis)
Market Cap: $398.594mn
Thoughts: As OSMO has only been trading since September 2021, and both pairs thus look largely identical, I will focus here on OSMO/USD.
Looking at the daily for the pair, we can see that the consolidation below the 200dMA and prior support at $1.05 ended up rejecting and price turned lower, now hanging above the all-time low at $0.68 and marginally above reclaimed support at $0.74. This range is quite obviously vital; either we sweep the double bottom at $0.68 and reclaim the range or we mark out a higher-low here and turn higher. If we get the former scenario, I am adding to my position on the reclaim; if we get the latter, I am adding above $1.05. If we close below $0.68 and then turn lower from there rather than reclaim the range, I will exit my position and see what happens…
Price: $0.0494 (239 satoshis)
Market Cap: $283.101mn
Thoughts: Looking firstly at ROSE/USD we can see that following the rally through resistance at $0.071, price rejected at $0.088 and has turned lower, retracing towards the support cluster between $0.043 and $0.052, where it has found some demand. This is also the prior swing-high that preceded the leg lower into the current bottom, so there is confluence here for a higher-low to form. If we drop into the daily, we can see that price has marginally broken back below the 200dMA, having rejected just below the 360dMA as resistance. If we do mark out a low here above $0.043, I would expect any close back above $0.061 to open up an accelerated move back towards the 360dMA and reclaimed resistance at $0.088. Clear that level and we push into $0.115. If we lose $0.043 here, I will look to exit my position around breakeven and buy back either on a reclaim or down near the all-time low at $0.029.
Turning to ROSE/BTC, we can see that price is retracing back into reclaimed support at 246 satoshis, set to close the week marginally below this. As long as major support at 202 satoshis holds firm, however, there isn’t much else to glean from this structure. As can be seen on the daily, we are still below the 360dMA as major resistance and have lost the 200dMA once again, but the 360dMA is really what I am paying attention to here as resistance; once we break above that, and hold it as support, I think ROSE really kicks through disbelief into its next bull cycle.
Price: $0.269 (1305 satoshis)
Market Cap: $99.036mn
Thoughts: I am going to focus on MC/USD here as the two charts look basically identical.
Looking at the daily for the Dollar pair, we can see that price is right at the all-time low, and I would expect to see something of a wick below $0.25 before we mark out a bottom now that we are down here. If we do come below and then reclaim $0.25 as support, that is a strong signal for me that this is a bottoming pattern, which will be confirmed on a weekly close above the $0.46 resistance cluster (and the 200dMA that has capped price its entire existence). If we close below $0.25 and turn lower from there, I will exit my position and wait for a reclaim to re-enter, or for a new range to form. Very straightforward. I am very keen to hold this one for its first bull cycle.
Let’s take a look at Bitcoin’s historical cyclical trend here to finish up this week’s post.
Whilst I do not recommend drawing any certain conclusions from simply marking out how cycles have occurred previously, if you believe in the long-term growth of crypto, there is something to be gained from having an understanding of what has occurred and appears to continually occur.
I have marked out a cycle as three main stages – beginning with the 2013-2015 bear market, where BTC lost 85% of its value, this stage appears to last on average around a year. Following the bear market and the marking out of a bottom, price generally consolidates and then rallies towards the Bitcoin Halving, having tagged the 61.8% retracement and then rejected on both of the previous major cycles ($780 in 2016 and $13,500 in 2019). Following this period, we have the period in which price makes the ascent to new all-time highs post-halving, which took ~180 days in the first major cycle and ~220 days in the second cycle. Following the marking out of a new all-time high, we appear to get an equivalent period to the bear market (or slightly shorter) in which price rallies in parabolic fashion to mark out the next cycle top. If we assume the bottom is in at $15.5k on the 360wMA in early November 2022, we can expect to see the 61.8% retracement tagged – just like in previous cycles – before the next halving in late March 2024. If this cycle takes roughly the same amount of time (721-735 days) to form a new all-time high after the bottom, we’d be looking at November 2024, and if we get another 47-50-week parabolic rally post-ATH, we are looking at the next cycle top to form in late Q3 or early Q4 2025. That means we still likely have two and a half years before the next cycle top, if the next cycle assumes the pattern of the previous two cycles.
Regardless of this, my point here is simply that, if we look at previous cycles and we look at the current bear market, even in the case that we match the 83% decline of the previous bear market, we would see price tag the 500wMA at ~$12k, find a bottom and then continue higher towards a new all-time high some time in 2024 – the worst very much appear to be behind us, at least as regards time. Looking at price, I am of the belief that the bottom is in here, and that even if we retest $15.5k, we more than likely just sweep the low and reverse rather than break 20-30% lower, consolidate down there and then rally off that low. If you look at how the previous cycles have functioned, there are only marginal differences between the two, and so far the first act (the bear cycle) of this next major cycle has matched the duration of the previous. As such – and with price-action looking as it does at present – I do expect to see $48k traded before the next Halving in late March next year.
And that concludes this week’s Market Outlook.
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