Market Outlook #224 (13th June 2023)
Hello, and welcome to the 224th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Dogecoin, Polkadot, Uniswap, Magic, LUKSO and Constellation.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $502.495bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that following the news cycle of the past 10 days, the pair broke and closed below the 200wMA at $26.5k, selling off from the weekly open at prior support and closing marginally above support at $25.8k, where is is currently sat early this week. We do not yet have a weekly close below that support level but the move below the 200wMA wasn’t particularly promising; and, moreover, we do now have a weekly downtrend with that series of lower-highs and lower-lows, even if we haven’t had a clean break and close below any swing point (weak SFP after weak SFP), thus weekly structure is giving no clear indication at present. To make things even less clear, we are now sat right above that untested $25.2k range breakout level. So, what do bulls want to see? Well, some sort of impulse move lower after some news this week that takes the pair into $25.2k and potentially below it, with price then rapidly finding demand and reclaiming $25.2k as support – that would be a very clear signal for me that we have a bottom forming in a critical area. For bears, the view is very straightforward – close the weekly back inside $25k and it looks very likely that BTC will run back towards that $22.5k area to test it as support and retrace the full impulse candle higher.
If we look at the daily, we can see trendline resistance continuing to cap the rallies, with a lot of chop between $25.8k support and the $27k area over the past week. We continue to chop here early this week, with resistance at $26.6k once again capping the highs but price struggling to break below $25.8k. If we do see a daily close below that level, I would expect that to bring with it the flush lower I am talking about, where we could run as low as the 200dMA at $23.6k before finding demand – if that demand is found and price begins to v-reverse back above $25.8k, I would be looking for acceptance above that trendline for confirmation that we are moving higher for a third-leg of this rally into $33k; conversely, if we do see that v-reversal and then reject again at the trendline, I would be looking for shorts into $22.5k. Lastly, if we begin to accept below this cluster of prior resistance between $24.3k-$25.2k without any demand stepping in, again I would be looking for intra-week shorts towards $22.5k, with a close below that making the March low at $19.5k the next target. Let’s see how the rest of this potentially volatile week develops.
Price: $1,747 (0.0673 BTC)
Market Cap: $209.984bn
Thoughts: Beginning with ETH/USD, on the weekly we can see that price sold off from the weekly open and closed back below the pivot at $1847, closing out the week at $1750. This again is not particularly promising given the strong move back above that level, and when we consider BTC/USD’s context there is a strong possibility that ETH loses this historical support area and drops into that 200wMA at $1550, with $1508 the minor support level below it. If we do see that, bulls want to see demand step in around that area and quickly push the pair back above $1717; if we see that, I would expect continuation back above the $1847 pivot followed by a retest of the $2037 reclaim resistance. However, if we see acceptance around that $1550 area and a weekly close below $1717, we have bearish structure on that timeframe and we have entered a new range between $1508-$1717 – any break and close below $1508 and I think we take out the March low at $1360, with two ominous sets of double bottoms below that. Looking now at the daily, we can see we had that breakout beyond the trendline followed by a successful retest but we have since given away those gains and that promising structure and closed back below all of this. The pair is now consolidating between $1717 and $1763, sat right beneath that trendline. I would be looking for any signs of a bottom around that $1508-$1620 region for a longer-term swing long towards $2425. If, somehow, bulls step up before that and we start to push back above the $1847 level, I would be looking for longs on a retest again towards $2425. For shorts, I would like to see a push into $1847 this week that gets rejected and then look to open on a daily close below $1716, looking for $1620 as a first target.
Turning now to ETH/BTC, despite the multi-week rally we were always struggling with that key resistance cluster and last week rejected a move beyond trendline resistance and sold off hard, closing the week back below the prior weekly low and thus back below the mid-range. This is the makings of another local top at present, unless demand is found over the next week above 0.066 that pushes the pair back above 0.069 to take another crack at a breakout. If that doesn’t happen, we still have a long-term downtrend in play with every rally capped by that trendline leading to fresh lows, so I am still looking at 0.594 for the next leg lower.
Price: $0.062 (239 satoshis)
Market Cap: $8.675bn
Thoughts: If we begin by looking at DOGE/USD on the weekly timeframe, we can see that the pair has been range-bound for the bulk of the past 400 days and has recently closed the weekly below support at $0.065 and sold off into the May 2022 lows at $0.049, now also where the 360wMA is sat. This area provided some initial support and the pair is now sat just below that $0.065 area. This is exactly the sort of area I would expect DOGE to form another bottom, but what would be most convincing would be to sweep that May 2022 low and the 360wMA towards support at $0.04 to trap breakdown shorts, then reverse and reclaim the range support at $0.049. If we see that, I am jumping in for sure. Conversely, the end of the world as we know it is truly upon us if we get a weekly close below $0.04, as there is then no support for another 50% of downside, having already retraced 95% from the all-time high. Now, looking at the daily, if we don’t get that flush of the support below but rather begin to flatten out and chop in this area, I would be keen to get involved if we break and close back above $0.08, where the 200dMA is sat, where daily structure turns bullish again and I would be looking for an entry as close to a retest of $0.065 as possible as reclaimed support.
Turning to DOGE/BTC, we can see from the weekly that price has closed below the 200wMA but continues to hold above that May 2022 support at 220 satoshis for now, having briefly wicked below it last week. That being said, structure here doesn’t yet look particularly attractive for a bottom and if we begin to break below 220, I am looking at that 182 satoshi area, where there is untested prior resistance and the 360dMA. If we don’t see that and this ugly price-action resolves with a push higher off this support, reclaiming 290 satoshis would be huge, in my view, for another run higher, at least into 370 satoshis…
Price: $4.67 (17.986 satoshis)
Market Cap: $5.801bn
Thoughts: Beginning with DOT/USD, we can see on the weekly timeframe that the pair got slapped lower once again last week, selling off from $5.34 into the December 2022 lows at $4.21 but marginally holding above that area for now, with minor support at $4.49 being reclaimed early this week. Weekly structure is bearish here and I wouldn’t expect to see such a clean double bottom hold at $4.21 to be honest, with any bounce from here into $4.97 opening up an opportunity to short back into last week’s low. If we do breach $4.21, there are a couple of scenarios I have in mind: the bullish one is that we catch an immediate bid on running that low and reclaim the level as support, then holding above it and beginning to turn daily structure bullish from there; less bullish would be acceptance below that level, in which case I think we also run the clean bottom at $3.52 before marking out this cycle’s low, where I would look to buy spot DOT on a sweep and reclaim of $3.52. Close the weekly below $3.52 and there is quite literally not support back into the all-time lows at $1.42, but saving Binance and Coinbase being convicted of criminal charges and being forced to pack up shop by Gary, I do doubt that we see anywhere near those levels.
Turning to DOT/BTC, we can see that the pair has been in a downtrend now for 756 days, since the April 2021 highs, having traded below the 2021 low at 1783 satoshis last week into 1640. The weekly then closed below that prior cycle low and unlike the Dollar pair there is very little holding it up here above the all-time low at 1184. If we drop into the daily, we can see that the pair is finding demand early this week that is taking it back above that level, but I would want to see much more demand step in and drive this back above 2000 satoshis before getting too excited about a bottom being in.
Price: $4.44 (17,082 satoshis)
Market Cap: $3.352bn
Thoughts: If we begin by look at UNI/USD, much like DOT it has been in a perpetual downtrend for the past 770 days, with trendline resistance from the all-time high continuing to cap it. Last week saw price break down from a multi-week consolidation right below that trendline and fall into the May 2022 support cluster at $3.52, above which it is now chopping around. What bears want to see here is any push into $4.80 get slapped back down and price break and close below $3.52, opening up another 15-20% of downside into the next support. Bulls, however, want to see any move below $3.52 get bid hard very quickly and price to rally back above $4.80; if we see that followed by a trendline breakout, I think the bottom is in and I’d look to buy spot UNI (again, after my failed first attempt).
Turning now to the BTC pair, we have retraced the entire rally from the May 2022 lows back into support at 1390 satoshis, but price bounced above prior trendline resistance from the all-time highs and this week that momentum has pushed it right into prior support turned resistance at 1750. If this is marking out a bottom, it should reclaim 1750 with no issues at all and close the weekly back above that level, with weekly structure turning bullish again above 2000 satoshis. Looking at the daily, if we do v-reverse off this trendline and May low retest, closing above 2000 satoshis would be my trigger to begin looking for spot entries again, with invalidation on a long-term position at 1380, as there should be zero reason to test a cyclical bottom a third time, in my view.
Price: $0.70 (2702 satoshis)
Market Cap: $152.227mn
Thoughts: As MAGIC has only been trading since 2022, I will focus here on the Dollar pair, as both pairs look pretty much identical at present.
Looking at MAGIC/USD, we have clear bearish structure on the most recent break and close below prior support at $0.77 (and the 360dMA) with the 200dMA and prior support having provided resistance at $1.06, which also had confluence with a trendline. So, that $1.06 level is very important on the reversal – if and when that gets cleared, I’d consider that a strong signal for another leg higher for the pair, into $2.16 and beyond. For now, however, we have bearish structure but some bullish divergence forming here and we are sat right above some support. What I would want to see to add to my MAGIC position would be a reclaim of $0.77 followed by a trendline breakout, where I would then look to add on a retest of that trendline as support with invalidation on a close back below $0.77 at that point. I would again look to add on a strong close above $1.06, which will round off my spot position, where I am looking to hold the majority into $5. If this is not the bottom, I will be exiting my spot MAGIC on a close below $0.60 and looking to rebuy closer to $0.37.
Price: $7.62 (29,316 satoshis)
Market Cap: $118.679mn
Thoughts: If we begin with LYXE/USD, we can see on the weekly that it has been trending higher in a fairly clean channel since last June, more recently rejecting a breakout above channel resistance at $16 and retracing back into the prior swing-low at $7.62, just marginally above channel support. Based on this being a 12-month uptrend within this channel and the R/R of taking a punt here, I am buying LYXE at $7.30 with invalidation on a close below the channel (and a hard stop at $6), looking for a return to the top of the channel over the coming months at $16. If we do close below the channel, I would have loved to have taken the other side of the trade, short around $6 and looking for a return to support at $4.30, but there are no perpetual contracts as far as I am aware for LYXE. Regardless, structure is super clean here and for now we still have weekly bullish structure within an uptrend.
Turning to LYXE/BTC, again we have an uptrend since June but we have been range-bound between support at 28k satoshis and resistance at 48k satoshis for the past six months or so, with weekly structure still bullish. We have returned to the bottom of that range, providing confluence for our spot buys, and we do have some hidden bullish divergence forming. Obviously, if we now close the weekly below 28k and start accept below this support, weekly structure turns bearish and the divergence is invalidated, and we likely head lower towards 23.1k satoshis, with any close below that likely leading to a full retraced of this rally back towards 13.5-16.4k satoshis.
Price: $0.029 (112 satoshis)
Market Cap: $83.861mn
Thoughts: Finally, if we look firstly at DAG/USD, on the weekly we can see that the pair has been in a very clean downtrend since the all-time high, with every rally capped by trendline resistance for almost two years. We have recently broken below support at $0.034 and retested it as resistance, continuing that bearish structure, but we are now finding support at a huge historical pivot around $0.0266. This range between $0.0237-0.0266 capped the pair for over a year before the breakout in 2021, then acted as support for the bull cycle into that all-time high. We have now returned to it and I would be very keen to be a spot buyer inside that range, with invalidation on a weekly close below $0.0237, looking to add spot on a weekly close above that trendline resistance. Again, super clean structure here. I have marked out this trajectory on the daily for clarity, though it may well dip below $0.0237 before reclaiming or take longer to accumulate around here before moving higher, but this is a really important level in DAG’s price-history.
Looking now at DAG/BTC, we have retraced 91% from the all-time high and are sat of support at 106 satoshis, with some minor bullish divergence beginning to form here on the weekly. I am focused here on the dollar pair for my setup, but something that would make this far more attractive for upside prospects is a weekly close back above 143 satoshis, then turning weekly structure bullish with a close above that prior swing-high. If we lose this support, I would expect to see another 15% drop towards 83 satoshis, with major support just below that at 67. Looking briefly at the daily, we can see some bullish divergence here also but again we want to see a clean break and close above that 143 area before we get excited.
And that concludes this week’s Market Outlook.
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