Market Outlook #222 (29th May 2023)
Hello, and welcome to the 222nd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Polkadot, Arbitrum, Apecoin, Axie Infinity, Chiliz and Ocean Protocol.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $541.359bn
Thoughts: If we begin by looking at BTC/USD on the weekly timeframe, we can see that price bounced hard off the 200wMA last week and rallied back up above minor support at $27k, pushing right into the weekly close at $28.1k – just below prior support turned resistance. That rally saw price engulf the previous weekly range off key historical support, which is very promising indeed, but now we need to see the momentum carry through this week. For me, the first sign of continuation higher and that third leg into and above $31k will be when price begins to accept back above $28.8k – if we see that, I think we retest $31k pretty swiftly. Obviously, what bulls do not want to see occur here is a deviation back above $28.8k leading to another lower-high and then rejection back below that key level, which will point to more chop between there and the 200wMA.
Looking at the daily, we can see this structure more clearly, with price having printed a double bottom at the $25.8k level and then rallied back above $27.7k, which had capped the pair for the prior week. That clean double bottom is not particularly nice as regards a bottoming formation – I’d have much preferred to see a sweep into $25.4k and then the reversal, but more broadly what we have is two deviations below $26.6k support followed by a reversal. This rally took the pair marginally through trendline resistance from the $31k high but now bulls want to see that reclaimed support at $27.7k hold firm. If this is a fake-out, we should see a pretty swift retracement back below $27.7k and the trendline, which would open up short opportunities back into that double bottom, in my opinion. However, hold this area and push back above $28.8k and I think the next leg of this longer-term uptrend has begun, particularly with momentum indicators pointing higher.
Price: $1903.88 (0.0682 BTC)
Market Cap: $228.831bn
Thoughts: Looking firstly at ETH/USD, we can see firstly that ETH appears to be leading here again, having reclaimed that $1850 pivot as support and closed the weekly back above it. We are now sat in no man’s land at $1904 between reclaimed support and that $2037 resistance. As I mentioned last week, if we saw a weekly close firmly back above $1850, I expect to see a rally back into that $2037 level to retest it as resistance, with any weekly close above that opening up the move into $2425 for the gap fill. Dropping into the daily, we can see that price closed above trendline resistance much like BTC/USD and has been capped by minor resistance around $1945 – if this breakout is legitimate, we should see any dip back towards $1850 met with demand that sends the pair through $1945, with a daily close above that level opening up that $2037 retest. Daily structure is also now bullish, as is momentum, so I wouldn’t be too quick to fade this unless we actually close back inside $1850, in which case I would look for short exposure all the way back towards $1620.
Turning to ETH/BTC, we saw another minor rally last week but once again the pair remains capped by the confluence of resistance around that mid-range. As has been the case for a few weeks now, I am looking for a clean weekly close above 0.071 to confirm that this downtrend from the September 2022 highs is likely over, as we would then clear the mid-range at 0.069 convincingly, as well as trendline resistance and turn weekly structure bullish following this most recent higher-low. Dropping into the daily, we can see that the 200dMA and 360dMA still loom overhead capping price along with the rest of the confluence in this area, only adding to my conviction in ETH should we see a strong move through 0.071. For bears, we are still very much in a longer-term downtrend for now and this may well be another in a series of lower-highs, which would be confirmed for me if we now close back below 0.066, which has been holding nicely as support; in that event, I would expect at the very least a retest of the 0.064 higher-low, but likely much lower prices if this is another lower-high.
Price: $5.48 (19,624 satoshis)
Market Cap: $6.776bn
Thoughts: Looking firstly at DOT/USD, we can see that the pair has begun to flatten out over the past three weeks above support at $5, which is a promising sign following the multi-week retracement. That being said, until we close the weekly back above $6, I wouldn’t be too quick to jump the gun and get involved. If we lose $5. there’s another 10% drop into the next level of support, but at that point I would be expecting a sweep of the December lows at $4.20 before a bottom has formed. For now though, this is looking like a macro higher-low above that, almost in an Adam & Eve style formation. Turning to the daily, we can see that price has been in a really tight range over the past couple of weeks and is now breaking above that, turning daily structure bullish – what we want to see from here is price holding that $5.35 area as support now and breaking back above the 200dMA at $5.76, which in turns opens up that pivotal $6 reclaim. If we do start to accept back above $6, I will be looking for leveraged longs with a target of $6.96, followed by $8.57.
Turning to DOT/BTC, we broke below support at 21k satoshis and bled lower into 18.8k, which has now held for a few weeks but price is being capped by 20k satoshis. More broadly, we are hovering above the last major support level at 17.8k above that all-time low at 11.8k satoshis, so if there was ever an area of historical support for this to bottom, anyone with long exposure wants it to be here, else it is a long drop to come. If we look at the daily for some clarity, we can see that the 200dMA and 360dMA are still trending down and the former has capped every rally since the May capitulation. Daily structure is still bearish here despite this short-term range formation and it is very possible we see another leg lower into that 17.8k level before forming a bottom. To be honest, I am not even paying attention to that level at the moment – what I want to see is a break back above 21k satoshis and that level to act as support again before I get excited about higher prices for DOT, in which case I would then expect the pair to be drawn towards that 200dMA again for a retest below 25.6k satoshis.
Price: $1.26 (4513 satoshis)
Market Cap: $1.608bn
Thoughts: As ARB has only been trading since March, I will focus here on the Dollar pair.
Looking at ARB/USD, we can see that price found support in March and April at $1.10, rallied off that base into an all-time high at $1.82 in mid-April and has since been in a downtrend, retracing 444% of its value from that high into $1.11 in mid-May and capitulating below it to print an all-time low at $1.01 – price immediately broke back above the $1.10 area and has spent two weeks now consolidating between $1.10 as reclaimed support and resistance at $1.21. As of yesterday, this range resistance has given way, turning daily structure bullish with momentum indicators pointing higher. Price is now sat right below prior support at $1.28, which is capping the pair, and bulls want to see a higher-low form from here above $1.21 followed by a close above $1.28, which in my view looks like the beginning of a new uptrend for ARB, with major resistance at $1.44 the next target from there, followed by the all-time high. As long as this doesn’t close back inside that range, it’s looking promising…
Price: $3.27 (11,700 satoshis)
Market Cap: $1.204bn
Thoughts: As APE has only been trading for around a year, I will focus here on APE/USD.
Looking at the dollar pair for APE, we can see that price has retraced 91% from the all-time high of $27.61 into an all-time low at $2.61 in November 2022, rallying from that low above historical support at $3.09 into $6.47 before forming a top in February 2023. Since then, we have seen price trending down, remaining below the 360dMA and losing the 200dMA in March, which has capped price since, along with trendline resistance from the January high at $6.47. More recently, APE has broken below support at $3.64 to fall back into that historical support at $3.09 and has formed another base here, with range formation between $3.64 now acting as resistance. As long as the pair can now hold above $3.09, this looks like it could be the beginnings of a bottom, where bulls would want to see further consolidation below $3.64 for a few weeks followed by a strong impulse move back above that level and above trendline resistance for confirmation. If this is not the local bottom, any daily close below $3.09 opens up a retest of the all-time lows into $2.61, where I would be keen to buy a sweep and reclaim on spot. Not much else to add here for now.
Price: $7.21 (25,825 satoshis)
Market Cap: $833.375mn
Thoughts: If we begin by looking at AXS/USD, we can see that the pair is seeing volatility diminish right around prior resistance turned support at $6.60, which marked out the support above the bottom at $5.85 back in Q4 2022. Bulls really want to see this 200-day bottom hold firm here, with confirmation occurring on a weekly close back above prior support at $8.20 in my view. If we see that, I will be keen to get involved again and look to buy spot around that $8.20 level with invalidation at $5.80 and looking to hold for another cycle. Conversely, if this is not the bottom, bears will absolutely drive this below $6.60 and any weekly close below that level for me would open up $3.30 as the next support, which would be a blind buy for me though I really do doubt we get such an opportunity. Dropping into the daily, we can see that price is consolidating above that $6.60 level for now and capped by trendline resistance from the January highs and the 200dMA – close the daily above that confluence of resistance around $8.10 and I think it’s game on for the cyclical reversal, with a retest of $13 expected shortly after that…
Turning to AXS/BTC, we can see that the pair continues to bleed lower in a 600-day downtrend which has seen price lose 93% of the value from the all-time high. We are now hovering above prior resistance at 19.4k satoshis but range-bound for four weeks between support at 29.4k and resistance at 29k satoshis. Trendline resistance from that all-time high continues to cap price, as does the 200dMA, and we can see some spot volume coming in here within this range which is somewhat promising. Nonetheless, I would be waiting for a reclaim of 29k satoshis, as that turns daily structure bullish – beyond that we want to see 35k reclaimed as there is a huge confluence of resistance there, with prior support, trendline resistance and the 200dMA – clear that and I will be adding a lot more spot.
Price: $0.101 (365 satoshis)
Market Cap: $544.658mn
Thoughts: Beginning with CHZ/USD, we can see that price has been consolidating above support at $0.10 since February, with the pair capped by the 200dMA and prior support at $0.15. We remain above the May 2022 capitulation lows at $0.075, which remain the invalidation level for any spot exposure here – close the weekly below that and there is quite literally no support for more than 50% lower into $0.032, which makes me very keen to get involved between $0.075 and $0.10 given the clear invalidation. I will be looking to buy spot here and add if we lose $0.095 at $0.081 but immediately exit on a close below $0.075, with a first target of $0.32 but looking to hold for a cycle.
Turning to CHZ/BTC, we have retraced almost the entirety of the rally from May 2022, with price printing a double top at the all-time high and bleeding lower for all of 2023. We are now sat right above support at 350 satoshis, which bulls want to see hold firm, as any weekly close below there opens up at the very least a sweep of the May 2022 capitulation low at 313 satoshis, with no support below that into 200 satoshis. If we do sweep and reclaim that level, that is a strong buy signal for me – as is a weekly close back above the 200wMA at 440 from here. Simple structure.
Price: $0.351 (1258 satoshis)
Market Cap: $152.215mn
Thoughts: Beginning with OCEAN/USD, we can see that price has rallied hard off the December 2022 bottom, rejecting at trendline resistance from the all-time high and then consolidating for most of 2023, now holding above support at $0.32 but capped by prior support at $0.40 and the 200wMA. If we drop into the daily for clarity, we can see that steeper trendline resistance is also capping price but the 200dMA is holding as support and has done since breaking above it – ideally, bulls want to see a strong move up from here beyond that resistance cluster between $0.37-0.40 and any close above that would open up another leg higher, with $0.56 as a first target followed by $0.80. Unless this loses $0.28, I don’t think there’s any reason to be bearish, to be honest.
Turning to OCEAN/BTC, we are consolidating below the 200wMA as resistance at 1400 satoshis with weekly structure bearish but price is finding support at 1050 satoshis and is printing bullish divergence in this area. Bulls want to see a weekly close above 1450 satoshis to turn structure bullish, which would be my signal that the gap into 2200 satoshis is going to get filled in at the very least, if not continuation higher beyond 2775 into 3400 satoshis – thus, I would be keen to hold spot on a weekly close above 1450 with invalidation below 1050. Not a lot else to add here – let’s see if we get that impulse move higher to get involved!
And that concludes this week’s Market Outlook.
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