Market Outlook #221 (23rd May 2023)
Hello, and welcome to the 221st instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Uniswap, Algorand, Blur, Vulcan Forged, Perpetual Protocol and Cellframe.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $529.104bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly timeframe that price consolidated last week on declining volume but held above the 200wMA at $26.3k, wicking up towards $28k but rejecting and ultimately closing the week out at $26.7k. Early this week, we can see demand stepping in at prior support around $27k, and if we can hold above this level and close back above $28.2k, I would expect to see continuation higher from here and a third leg of this uptrend begin towards that 38.2% retracement level at $36k.
If we drop into the daily for clarity, we can see the current structure is such that we wicked below $26k, bounced and have since consolidated between $26.5k as support and prior support at $27.6k as resistance. We have trendline resistance from the April highs still capping price and price is currently bouncing off the bottom of this short-term range; if, from here, we can break and close back above both $27.6k and trendline resistance (likely above that $28.2k prior range support), then we have a return to bullish structure after a sweep into a key pivot and we could look to play longs from there into $30k as a first target followed by $36k if we can accept above that. Conversely, a fake-out above $28k followed by a retrace back inside $27.6k range resistance would look to me as an opportunity to short back towards $25.4k.
Price: $1,854 (0.06797 BTC)
Market Cap: $223.103bn
Thoughts: Beginning with ETH/USD, we can see on the weekly timeframe that last week saw price continue to consolidate right around that $1850 level where it has been chopping for weeks, closing marginally below it at $1805 after testing it as resistance. Early price-action this week is seeing the pair pop back above that level, but until we get a strong weekly close through it, I don’t think we can get too excited. Similarly, until we see a weekly close back below that support at $1760 I don’t think there is any clear indication of direction beyond more chop. However, dropping into the daily, we can see more clearly how price is breaking above $1850 here and if we can get a daily close above the level, bulls want to see it defended on a retest leading to another push up above and beyond local trendline resistance – if we see that, it would look like a bottom to me and I would expect to see another leg higher into $2425, with $2037 as major resistance prior to that. Conversely, and much like BTC, fake-out above that trendline and then close back below $1847 and I would be looking for shorts back towards $1640.
Turning to ETH/BTC, we can see that the pair continues to grind higher after the higher-low at 0.0639 but despite consecutive higher closes that mid-range continues to cap the weekly highs. As such, I am looking at this as resistance until it isn’t; close the weekly back above 0.071 and things get exciting for ETH. If we turn to the daily, we can also see declining volume as price pushes up into this resistance, which isn’t particularly promising and thus for now it looks like we will form another lower-high below trendline resistance – this would be evidenced by a push higher into the confluence of resistance followed by a rejection and break back below mid-range, from which point I would expect that next leg lower to begin. If we do see bulls take control and we get that break of trendline resistance and bearish structure, I am looking at a retest of the 2022 open as the first major resistance.
Price: $5.11 (18,715 satoshis)
Market Cap: $3.849bn
Thoughts: If we begin by looking at UNI/USD, we can see from the weekly that price continues to be capped by long-term trendline resistance from the April 2021 all-time high over two years later, with rallies throughout 2023 having rejected at it. We are now sat right at resistance turned support between $4.78-$5.06, which has held as support since September 2022. Weekly structure is bearish and the pair is at a pivotal area – if we see this long-term support level give way here, we can expect to see another 40-50% retracement into the next level of support, which is the May-June capitulation lows around $3.50; alternatively, if we wick below $4.77 and find strong demand, we would be looking for a swift reversal and rally through trendline resistance, where any close through that after deviating below support would look very much like a bottom to me and we could look to buy spot with a clear invalidation. Not much else to add here as the structure is super clean.
Turning to UNI/BTC, we can see that price has retraced much of the rally off the May 2022 lows, though we remain marginally above trendline resistance turned support from the all-time high for now. The pair is coming into support here at 16.8k satoshis but again weekly structure is firmly bearish. If we continue to push lower, loss of 16.8k will no doubt accelerate the bleeding and the pair will retrace back inside that trendline, with the May lows at 13.9k satoshis the next target, followed by major support at 12k satoshis below that. If we drop into the daily, we can see that momentum indicators are pointing to exhaustion into the 17.5k swing-low with price rallying off that level into 20k but rejecting there and now looking to turn daily structure bearish once again. If the low is in and this momentum exhaustion is valid, we should see a higher-low form above 17.5k satoshis leading to a rally back above 20k, confirming the bottom in my view; lose 17.5k and I do think we return to the May lows.
Price: $0.164 (603 satoshis)
Market Cap: $1.191bn
Thoughts: Beginning with ALGO/USD, the weekly timeframe shows us that price has returned to the historical support level around $0.16 after breaking below minor support at $0.182. We are capped by trendline resistance from the October 2022 highs and last week saw the pair reject at prior support and close right back at this support; close below this support level and there very minor support below at $0.144, but that is literally the only level left between here and all-time lows at $0.093. It is possible therefore that – if the bottom is in – we see price deviate below the December 2022 lows into $0.144 and then break back above $0.162, rallying through trendline resistance subsequently to confirm that bottoming formation. That’s the bullish scenario for ALGO. The bearish one is a weekly close below $0.16 that leads to acceleration into the all-time lows, where I would look to buy a sweep and reclaim. Looking briefly at the daily, we can see that support is just about holding here but daily structure is bearish, and unless we can find a bid here that takes the pair back above $0.18, thus turning daily structure bullish, it does look likely that this support will give way sooner rather than later…
Turning to ALGO/BTC, the pair has been trending lower since September 2021, and more recently turned its all-time low at 700 satoshis into resistance, closing the weekly below that level and bleeding into 580, where it has formed a fresh low and is now consolidating. We have no signs of momentum exhaustion yet on the higher timeframes and the pair is in bearish price discovery. However, if we look at the daily, we can see some signs of momentum exhaustion popping up and we have now formed a tight range between 580 and 630. If we break lower and deviate the all-time low whilst putting in another momentum divergence, we might finally be bottoming out here, but I think it is still too early to say. Alternatively, if the bottom is already in, we should see 580 protected and price break firmly above 632, turning daily structure bullish – even then, I would only be interested in longer-term exposure once we reclaim that prior ATL at 700 satoshis to be honest.
Price: $0.494 (1811 satoshis)
Market Cap: $234.967mn
Thoughts: As BLUR has only been trading since February, I will focus only on the Dollar pair here.
Looking at BLUR/USD, we can see that price found support on initial trading at $0.48, rallied into an all-time high at $1.40 before topping out and beginning its first bear cycle in late February. Since, it has retraced into $0.44 in mid-March, rallied off that support into $0.86 and then recently retraced back into $0.44 as support, wicking marginally below that earlier this month to put in an all-time low at $0.438. Price has been consolidating between $0.44 as support and prior ATL at $0.485 as resistance for two weeks now, and we are seeing that range resistance give way – if we can break and close back above $0.49, this may well have been accumulation at historical support and any close above $0.52 subsequently turns daily structure bullish. I would then look to buy spot with invalidation below $0.44 and looking to hold for its first bull cycle, likely to well beyond that $1.40 all-time high.
Price: $3.74 (13,706 satoshis)
Market Cap: $89.441mn
Thoughts: Beginning with PYR/USD, we can see that price has been range-bound now form over a year above $2.60 as support and capped by $4.70 range resistance. I am still holding spot here with my invalidation still intact for now – if we retrace back into $2.60 and close below it on the weekly, I will cut and wait for a reclaim or for lower prices down at $1.82. Similarly, I will be looking to add to my long-term spot position on a weekly close above $5.25 with a view to hold for fresh all-time highs in the next cycle. If we drop into the daily, we can see that the 360dMA is finally giving way here also as it flattens out alongside the 200dMA – hold above both on a retest and I think we make another attempt at $4.70. Looking longer-term, above $6.80 is just air into $16.
Turning now to PYR/BTC, we deviated below the May 2022 low and immediately V-reversed, with last week closing back at the 13k pivot and early price action this week taking the pair back above that level. That said, we are now coming up into trendline resistance from the October 2022 highs and if we start to reject here and close back below 13k satoshis, that would look less promising. If we do see that, I would expect a retest of the 11.3k satoshi low before any sustained reversal; however, if we can continue this rally and close the weekly above trendline resistance, bottom is in in my opinion and we rally towards 20k next.
Price: $0.598 (2192 satoshis)
Market Cap: $43.446mn
Thoughts: Beginning by looking at the weekly for PERP/USD, we can see that price has retraced back below prior resistance at $0.70 and is now sandwiched between that level and $0.50 as support. I want to see $0.50 hold here as any move below that level opens up another 30-40% of downside back towards cycle lows and I would be cutting my spot position in that scenario. If we do begin to flatten out above $0.50, we want to see a rally back above $0.75 to confirm a macro higher-low above the Q4 lows and I would then expect a retest of major resistance at $1.03 to follow. Looking at the daily, we can see that the 360dMA continues to cap price and that we have retraced back below the 200dMA now also, so there is a huge cluster of resistance between $0.63-0.75 now – weekly close through that cluster on decent volume and I think we’re looking great for trend continuation higher. $0.50 is my line in the sand here for another leg lower.
Turning to PERP/BTC, the pair has retraced towards the all-time lows, holding above them for now around 2100 satoshi support. This where we want to see price begin to flatten out and volatility diminish – if instead we see a weekly close below 2100, I would expect to see the all-time low at 1940 taken out and then we’d either be looking at bearish price discovery or at a sweep and reclaim of that low. Dropping into the daily, one thing I do really like about this pair is the volume profile since June last year, where we have those accumulation spikes persistently within the range – in fact, this very much feels textbook altcoin whereby we see a high-volume rally out of a range followed by a retracement to range lows to get those who who bought during that Feb-March period to puke their coins at much lower prices. We haven’t got any momentum exhaustion yet on the daily here but we are finding support above 2100 for now. A daily close back above 2400 turns daily structure bullish from there and I would then be looking for continuation back above 3000 satoshis to confirm that cyclical bottom.
Price: $0.219 (805 satoshis)
Market Cap: $6.337mn
Thoughts: I’ll be focusing solely on CELL/USD here as that’s the chart I am looking at for my longer-term spot positioning.
For those that read my Top Picks post for this coming cycle, you’ll now that I had marked out that $0.18 area as a prime opportunity to get involved with CELL if we retraced into it. Well, we recently rejected three attempts at a 360dMA breakout and have broken back below both the 200dMA and support turned resistance at $0.24. Price is now bleeding lower towards that $0.18 area that marked out the June low. I am not going to be knife-catching here on the first test of the level, but what I am looking for is either some sort of bullish divergence into this cluster of support as we break lower or for price to flatten out again around that area before I jump in. Either way, this is now very much on my radar and invalidation on any spot exposure for me would be a close below that $0.14 all-time low, in which case I would either re-enter on a reclaim or wait for the formation of a new range lower down. Let’s see how the next few weeks unfold for this one…
And that concludes this week’s Market Outlook.
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