Market Outlook #227 (3rd July 2023)
Hello, and welcome to the 227th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Litecoin, Polkadot, Axie Infinity, 1inch and Vulcan Forged. I will also be looking at the broader market view in the context of Altcoin Market Cap.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $602.052bn
Thoughts: If we begin by looking at BTC/USD on the monthly timeframe, following the close of Q2 at the end of June, we can see how price continued to showcase strength, printing a bullish engulfing candle after wicking below the May low and ultimately closing above prior range support at $28.7k. June closed out at $30.9k on slightly higher volume than the previous month and given the strength shown to reclaim a historical level as support I am expecting to see continuation in July – at least into the 38.2% fib retracement of the entire bear market around $36k.
Dropping into the weekly, we can see how price reacted at $30.8k resistance, consolidating below that level all of last week in a very tight range on lower volume before beginning to break out beyond that prior swing-high today. If we can find acceptance above the $31k area, I would expect $33,1k to get swept next, where there is some prior support turned resistance, but ultimately I do expect t his to push for that gap fill higher into $36k. Unless we now start to close the weekly back below $28.7k, I see no reason to fade this strength at present.
Turning now to the daily, we can see that price cleared all the recent daily lows on the flash dump into $29.5k and then found support and rallied back into the $31k area, where it is facing plenty of resistance at present. We have consolidated below this level for over a week now and I would expect any daily close above $31.4k to lead to that next push higher into $33k, where there is some resistance. If we do push up into that area, I would view $31k as an area to buy dips if we drop into it with invalidation on a close back below that area, looking for $36k.
Price: $1963 (0.0633 BTC)
Market Cap: $236.096bn
Thoughts: Beginning with ETH/USD on the weekly timeframe, we can see that price consolidated last week but retested the pivot around $1847 as reclaimed support and pushed higher, closing the week out near $1963. We are currently in limbo between support and the next major resistance at $2037, but given last week’s retest of support I would expect to see a push higher into $2037 this week, where any weekly close through that level opens up that gap fill into $2425 that I have been mentioning for what feels like an age. If we drop into the daily, we can see that the trendline breakout acted as support – as did $1847 – and price is now consolidating right around minor resistance at $1950. Today’s movement is pushing the pair through that level but we’d want to see acceptance above it – a couple of daily closes through it or a retest as resistance turned support – before getting too excited about much higher prices. If we do see that, there isn’t anything between there and the $2037 level, so I would wait on the sidelines if you have no exposure rather than try to jump in there – rather, I think it makes more sense to await a weekly close through it and buy the first dip back into it the following week, with a view to hold for that $2425 level.
Turning to ETH/BTC, we finally see some signs of life as the pair wicked below support at 0.0622, made a fresh low above 0.06 but closed the weekly firmly back above support at 0.0622, painting a reversal hammer and a key reclaim. That said, we have pushed right into prior support turned resistance now and the pair is struggling, so any move back below 0.062 from here would suggest to me that this relief is short-lived and we are headed lower, towards that 0.0594 area. If instead we see acceptance of 0.0622 as reclaimed support and price then breaks back above 0.065, that would look much more promising structurally, and, if we look at the daily, we can see how the move below 0.0622 is currently looking like a deviation – just need that level to hold and I think this goes for another crack at trendline resistance.
Price: $107 (0.003474 BTC)
Market Cap: $7.923bn
Thoughts: Looking at LTC/USD, on the weekly we can see that price closed last week at fresh yearly highs, having bounced off prior resistance at $85 and rallied into the weekly close at $107.70. This also turned weekly structure bullish with the clearance of the prior swing-low at $98.60 and I would now be looking to get involved for continuation of this trend if we drop a little lower from here below $105, with invalidation on a weekly close back below $98. The target here for me is historical resistance at $147.50. Dropping into the daily, we can see that the breakout was very high volume and that momentum indicators are all pointing higher, with no resistance between here and that $148 area.. As such, I think clearing out the weekend’s low into or towards $99 would be a nice buying opportunity with a good R/R.
Turning to LTC/BTC, the pair had been consolidating above reclaimed support at 0.00285 for the past three months, with last week wicking below all those recent lows before rallying through prior support turned resistance at 0.00365, which had capped the pair since March. We are now turning a little lower, but weekly momentum and structure are pointing higher, and if we look at the daily we can see how the 360dMA has been somewhat of a magnet for dumps within this range. I would expect to see LTC bounce off 0.0033 and ten rally back above 0.00365, with the next target at 0.0044.
Price: $5.45 (17,583 satoshis)
Market Cap: $6.826bn
Thoughts: If we begin by looking at DOT/USD, we can see that price found support above the current cycle low from December 2022 at $4.21, consolidated and then rallied higher, reclaiming support at $5.12. We are now sat between this reclaimed support and the next support turned resistance level at $6. Weekly structure is still technically bearish given the lack of a higher-high as of yet, but the movement off that $4.20 level is very promising so far. Turning to the daily, we can see how the 360dMA capped the pair in April and hasn’t been traded above since 2021, aligning perfectly with that $6 area at present, so any acceptance above that would be a clear signal to me of a sustained reversal, with $7.08 the next target beyond that – clear that level and I think DOT is in dip-buying territory for the foreseeable future.
Turning now to DOT/BTC, we can see that price consolidated below the historical support at 17.8k for several weeks, swept minor support into 15.6k satoshis and then rallied higher, closing marginally back above 17.8k last week. This is exactly the sort of price-action I’d expect of a bottom from a historically significant level, but weekly structure is obviously still bearish and there is no sign yet of a reversal on momentum indicators on the higher timeframes. If we drop into the daily, we can see bullish divergence and a reversion to daily bullish structure here, but 16.4k now needs to hold as a higher low on any dip and then I’d like to see a strong push higher back towards 20k satoshis, where any weekly close above 21k would be a strong signal for me to get involved. Of course, if price rejects here and closes back below 16.4k, there is very little support below the 15.6k swing-low all the way back into the all-time low…
Price: $6.36 (20,534 satoshis)
Market Cap: $730.023mn
Thoughts: Let’s begin by looking at AXS/USD on the weekly timeframe. We can see that price broke and closed below the 200-day range support at $5.84, found support at $4.56, consolidated and has since reclaimed that range support, but is now pressed up against prior support turned resistance at $6.60. Weekly structure is still bearish here but the reclaim is promising given how sharp the capitulation was. From here, I would want to see $8.11 reclaimed, turning weekly structure bullish, before looking to get involved again. If we drop into the daily for more clarity, we can see how trendline resistance has capped the highs this entire year and that’s exactly where price is consolidating at present, alongside that prior support level, so any impulse move through this level and acceptance above $6.60 would be a really strong sign for the mid-term trajectory. If we see that and price starts to close above $8 subsequently, I’ll be looking to buy any dip back towards $6.60 (though likely a little higher) with invalidation on a weekly close back below that level, looking for $13 as a primary target, where I would hedge spot exposure until acceptance above that.
Turning to AXS/BTC, we can see that price has consolidated right around prior resistance at 19.4k satoshis, but remains below prior support at 23.8k which is now resistance, as well as the long-term trendline that has capped the pair since the all-time highs. This is the strongest level I can see for a bottoming formation without dumping another 50%+ lower into 9k satoshis. If we look at the daily, momentum is turning higher and daily structure is now bullish, but I do want to see that trendline cleared before I get excited about Axie again. Let’s see how the next couple of weeks unfold…
Price: $0.337 (1088 satoshis)
Market Cap: $318.968mn
Thoughts: Looking at 1INCH/USD, on the weekly we can see that the pair has been in a downtrend since November 2021, losing 97% of its value since then, most recently breaking below the Dec 22 lows at $0.37 and capitulating into a fresh all-time low at $0.24, then rallying back towards that prior ATL, below which it is currently consolidating. Weekly structure remains bearish and nothing on the momentum indicators yet suggest exhaustion of the long-term trend. If we drop into the daily, we can see this v-reversal pattern off the lows but whilst the pair remains below that prior ATL at $0.37, with it currently being untested, I am loathe to get involved here. I would rather see a strong close both above the prior ATL and above minor trendline resistance from February, then buy as close to $0.37 as possible. Invalidation becomes very clean then on a close back below that level and the first target would be the next prior support and 360dMA around $0.52.
Turning to 1INCH/BTC, we can see just how steep the recent capitulation has been, with no respite and no dampening of volatility to be found until that huge flush lower into a fresh all-time low at 913 satoshis. Since that, the pair has consolidated quietly for three weeks, currently capped around 1120 satoshis, but if we look at the daily we can see some semblance of structure: the pair swept recent support at 1000 satoshis and then bounced, rallying into resistance at 1126. If this level is closed above, daily structure turns bearish and those looking for a short-term play may have something on the cards, as there is a huge gap to fill back into 1417 and your invalidation would be that 973 swing-low. Not much else to add for this one whilst there is so little higher-timeframe structure.
Price: $3.32 (10,714 satoshis)
Market Cap: $79.356mn
Thoughts: Beginning with PYR/USD, we can see that price has been rangebound between support at $2.60 and resistance at $4.80 for a little over a year now, finding support recently around $2.90 and bouncing into $3.40, around which it currently sits. I have – as regular readers will know – been accumulating a position within this range, more recently buying on the dump into $3. Given the strength of this range following a 95% drawdown, I have a clean invalidation on this position on a weekly close below range support, in which case I would await a reclaim before rebuying or buy lower around $1.78, but I doubt we will be so lucky as to see such prices. All I am now waiting for is a weekly close through $5.20, which for me marks the beginning of the next bull cycle for PYR, where I am looking to hold for the majority of the cycle. Briefly dropping into the daily, we can see there is a huge confluence of resistance here, with prior support, the 200dMA, 360dMA and trendline resistance all aligning – close firmly above this and turn it to support and I think the game is on.
Turning to PYR/BTC, we can see price is consolidating right in between the two levels of resistance that preceded its first bull cycle, now acting as support above 9700 satoshis. Weekly structure here is bearish but we have bullish divergence on RSI, which is promising. Begin to close the weekly back above 11.5k satoshis here and I think it becomes more promising still, but weekly structure will not turn bullish until we see a higher high through 14k. If we look at the daily, we can see that 14k is also the level where the 200dMA sits at present, with the 360dMA above that at prior support around 16k satoshis – the latter of these has now been traded above since April 2022 and has capped many recent rallies, so clearing that will be a huge sign of what is to come, in my view.
Altcoin Market Cap:
Market Cap: $572.16bn
Thoughts: If we begin by looking at ALT/USD (or TOTAL2) on the weekly timeframe, we can see that the altcoin market, having rallied off range support at $426bn, found resistance below the September 2022 highs of $700bn, rejected and the market moved lower from there for several months, culminating in that strong flush lower at the beginning of June. However, this only took the market to higher-lows above $500bn, firmly above range support, and the market is now turning higher again. That being said, alts more broadly are now pressed right up again the range support from 2021 that preceded the major rally, so this is a key level to overturn; reclaim $596bn as support and the altcoin market will likely take out that $698bn high that has capped alts since 2022 and I would expect another major rally to begin, taking the market towards $870bn for a gap fill. If that does occur, it will be undebatable in my view that a new bull cycle has begun for the broader crypto market, as we will have emerged from a long-term range after a 76% drawdown, and I would consider alts to be in buy-the-dip mode until prior cycle highs get retested, likely in 2024 at some point. However, the bearish scenario has to be considered, and that is rejection here below $600bn leading to another capitulation leg lower through $500bn support and back into the bottom of the range at $425bn – that is around a 30% haircut for the whole market from here if that happens. For now, support is holding and momentum indicators are pointing higher.
Turning finally to ALT/BTC (or TOTAL2/BTCUSD), which prices the altcoin market in Bitcoins, we can see that the two-year range support at 19.7mn BTC got rinsed, with a weekly close firmly through it, but the market then found support and is now in limbo between major prior resistance at 16.6mn BTC (which aligns with the 360wMA and I believe would mark out an absolute cyclical bottom if tested) and that prior range support at 19.7mn BTC. What bulls want to see here is a v-reversal of sorts, reclaiming that two-year range support, as that would point towards a sustained reversal and continued outperformance of alts post-reclaim, with the mid-range at 24.2mn BTC being the target (25% of broader market outperformance before any major resistance). Ultimately, my view is that over time, the altcoin market price in BTC will continue to grow, and so I would expect any move back above that two-year range support to be the beginning of the next move towards cycle highs for the altcoin market. If we reject 19.7mn BTC, however, see you lower at 16.6mn BTC – but my personal view looking at this historical chart is that is as low as we would get as far as altcoin underperformance.
And that concludes this week’s Market Outlook.
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