Market Outlook #230 (25th July 2023)
Hello, and welcome to the 230th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Uniswap, ImmutableX, Axie Infinity, Ethereum Name Service, FLOKI and Aleph Zero.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $568.552bn
Thoughts: If we begin by looking at BTC/USD on the weekly timeframe, we can see that price closed last week still inside the range between $29.5k as support and $30.8k as resistance, but early price-action this week has taken the pair through $29.5k and back towards reclaimed range support at $28.7k. What bulls want to see here is for demand to step in anywhere between the 200wMA at $27.1k and $28.7k and form another higher-low in this general trend higher since October. If we do see buyers coming in this week within that range, I’d be looking for some sort of wick into that range to be followed by a strong push back out of it and a weekly close still above $28.7k for a higher probability bottom. In that scenario, I’d be looking for long exposure the following week to hold for another test of $30.8k and likely sweep of the highs into $33k. However, the bearish scenario I’m considering is if we push below $28.7k we then close the weekly back below it, in which case it is likely that level becomes resistance once again – then, I’d be looking for short exposure with a downside target of $25.8k. It is important to remember that weekly structure is still bullish here despite this weakness and that until we see a weekly close below $25.4k it will continue to be bullish.
Turning to the daily, we can see how the bearish divergence into resistance is playing out, with that daily close below local support yesterday. Price is now consolidating between range support at $28.7k and support turned resistance at $29.4k. Now, the most bullish scenario I can envision from here would be for price to take out yesterday’s low and wick towards the $28k area, enticing breakdown shorts, then immediately bounce higher and reclaim $29.4k. We’d then have trapped shorts and fuel for the next test of $31k. We also have some trendline support from the March lows coming in right around that 200wMA level at $27.7k, with the 200dMA just below this also (which itself marked out the March bottom). So, I think that whilst we have obvious short-term weakness here, there is a lot of fucking support right below us and the balance of probability in my view still favours upside going into August.
Price: $1861 (0.06365 BTC)
Market Cap: $223.779bn
Thoughts: Beginning with ETH/USD, we can see that price continues to hold above the pivot at $1847 and is just chopping around between that level as support and reclaimed resistance at $2037. Last week saw tight consolidation within the range of the previous weekly candle, and early price action this week is taking out both prior weekly lows into this support area. Now, if we do continue to find support above $1847, a wick through it followed by a strong push back above the level would be a good indicator that we’re likely headed higher following this chop. If instead this week continues to push below $1847 and the weekly candle closes below it, then that looks a little more bearish, as we’d have rejected key resistance and broken back below a local pivot – in that scenario, I’d be looking for a return towards that 200wMA at $1600. Dropping into the daily, we can see how despite the lack of exhaustion on momentum indicators, the pair ran higher into $2037, rejected, broke back below $1957 and then bled back towards support, where we sit currently. If we do wick lower, I’d actually be interesting in punting a long at $1770 with a view to cutting it if we don’t then reclaim $1850 on the weekly timeframe. We have this cluster of untested lows right around this pivot, so it would not surprise me if we flushed them and then reversed higher again. Looking below, we do also have confluence of the 360dMA at that $1600 level, so that’s definitely where I’d hedge any downside exposure if the short scenario sets up.
Turning to ETH/BTC, on the weekly we can see how the pair continues to hold above reclaimed support at 0.0622 and below prior support at 0.0645. As mentioned last week, this structure is more promising for ETH for upside, as we deviated multiple times below support and then reclaimed it. If we drop into the daily for clarity, we can see that daily structure is also forming higher lows but that we continue to be capped by prior support at 0.0645. If we now get a daily close above that level, I would expect to see a push towards that trendline once again. Unless we now close back below 0.0622, I am expecting upside.
Price: $5.77 (19,749 satoshis)
Market Cap: $4.356bn
Thoughts: If we begin by looking at UNI/USD, we can see from the weekly that price has finally closed above trendline resistance from the all-time high, having formed a higher-low last month above the May 2022 capitulation lows and then v-reversed back into that trendline. Price consolidated below it for a couple of weeks and then broke firmly through it, closing above $5.68 last week. We are now sandwiched between reclaimed support at $5.68 and support turned resistance at $6.38. From here, I would not be surprised to see this support give way and the pair go to form a higher low above $5.12, but that is the level I don’t now want to see fail. Anything above that looks like healthy structure but if we start closing back below $5.12 (the support that preceded this trendline breakout), I am jumping ship. Looking ahead, any higher-low should lead to continuation higher, with the $7.50 level the key one, as that has capped the pair on multiple tests since August 2022.
Turning to UNI/BTC, we can see that price bottomed out at the confluence of the May-June 2022 lows and trendline resistance turned support from the all-time high, rallying off that and now reclaiming 17.5k satoshis as support. That acted as a based from which the pair pushed higher into 21.1k last week, rejecting at that prior support. Above that level, it is clear skies for UNI for another 25% rally, with no resistance barring the way all the way into 27k satoshis. Looking at the daily, we can see how there is a little cluster of resistance here, with prior support and the 200dMA aligning, but above that there really is nothing all the way into 26.7k satoshis at the very least, above which the 360dMA also sits. Let’s see how this week unfolds…
Price: $0.707 (2418 satoshis)
Market Cap: $765.506mn
Thoughts: As IMX has only for a little over a year, I will focus here on the Dollar pair.
Looking at IMX/USD, we can see that price bottomed out at $0.57 in June and then broke above trendline resistance from the yearly highs, forming a fresh range with the 360dMA and 200dMA as range resistance at prior support of $0.80. Range support formed at $0.70 and price spent most of the past few weeks in between these levels. If and when we see the top end of this range cleared and price close firmly above $0.80, I think it begins to look very attractive again for another leg of upside, with invalidation below $0.57 and a first target of $1.62 followed by $1.84. This is definitely a spot position I want to be holding for the bulk of a cycle however, given that it has never experienced a bull market. Not much else to add here.
Price: $5.99 (20,491 satoshis)
Market Cap: $693.057bn
Thoughts: Looking at AXS/USD, on the weekly timeframe we can see that price broke below the 200-day range support at $5.85, formed a bottom at $4.60 and has since bounced and reclaimed that range support, spending several weeks now sandwiched in between it and prior support turned resistance at $6.60. This is a promising sign for a bottoming formation but weekly structure remains bearish. If we drop into the daily, we can see that price continues to be capped by trendline resistance from the yearly highs, having rejected a move above it twice in the past couple of weeks. That $6.60 level is super important and if we can get a strong move above it and trendline resistance, I’d be looking to rebuy my AXS bag with invalidation around $5.75. If we do get above it – and hold above it – I think the pair takes a crack at the 200dMA and prior support at $8 next.
Turning to AXS/BTC, we can see that price has been consolidating in a tight range right around historical resistance turned support at 19.4k satoshis. From here, bulls want to obviously see the 17.7k low hold, otherwise there is quite literally zero major support back into 9k satoshis, and for price to now push higher and reclaim 23.8k as support, then breaking and closing above trendline resistance that has capped the highs for almost two years. Looking at the daily, we can see there is some bullish structure forming here but we are largely just chopping between local resistance at 21.2k and support at 19.4k. Nothing clearer for me than the pair needing a strong move out of this range and back above 23.8k to really start looking like a bottom is in.
Ethereum Name Service:
Price: $9.19 (31,431 satoshis)
Market Cap: $237.349mn
Thoughts: As ENS has only been trading for around 18 months and both pairs look virtually identical, I’ll focus here on ENS/USD.
Looking at ENS/USD, we can see that price marginally swept the all-time low at $7.11 in June and v-reversed back into $10, where it rejected below trendline resistance from the yearly high and prior support. We have since retraced and it would not surprise me to see some of these untested lows from this recent uptrend get taken out. Ideally, bulls want to see any dip find strong support above $8, and if we get close to that I think it may present a high R buy, with invalidation at fresh all-time lows and a view to add to the position back above $10. Ultimately, ENS has never experienced a bull market and everything since May 2022 has been a large range between $7 and $18 – close the weekly above this range and I think that disbelief rally begins to kick in and its first bull cycle begins.
Market Cap: $219.598mn
Thoughts: Given FLOKI’s extremely large supply, it’s price does not even appear in satoshis, and so I have just included the Dollar chart here.
Looking firstly at FLOKI/USD, we can see how price experienced a huge bull cycle, then retraced most of the gains into the May 2022 bottom at $0.0000055 and then formed a 7-month range between there and support turned resistance at $0.000015. This was clearly an accumulation range, as price then rallied out of it in January and pushed as high as $0.000068, before forming a top and now spending most of this year in a slow bleed back towards that accumulation range. This is a very common pattern with altcoins, whereby you get that flat accumulation range followed by a ‘test pump’ out of the range followed by a return to the range before a new cycle begins. As such, it would make sense to me that FLOKI continues to drop towards $0.000016 and buyers step in around that level to form a fresh bottom. If we do see that, I’d want to see daily market structure begin turning bullish before looking at that as an opportunity to jump in (higher-high and higher-low off the bottom). Looking at the daily, we can see the pair is currently range-bound between the 200dMA as resistance and the 360dMA as support, so perhaps we don’t get the full retrace towards that accumulation range if the 360dMA continues to support price; once we get a daily close below it I think it’s game on for lower prices but if we do not get that, then I wouldn’t be interested in this until it closes firmly back above $0.000031, confirming bullish market structure and reclaiming that level as support. From there I think it is likely the pair gets another leg higher towards $0.000118.
Price: $0.921 (3150 satoshis)
Market Cap: $216.38mn
Thoughts: As AZERO has only been trading for a little over a year, I will look specifically at the Dollar pair for it.
Looking at AZERO/USD, we can see that price rallied after initial trading began, from an all-time low of $0.60 all the way into $3.08 as the all-time high in April 2022. This marked the top from which the pair retraced the entire rally back into the all-time low in June, and that marked out the bottom. Since, price has been slowly curling higher, with a rally into $1.58 in August followed by the formation of range support at $0.83. This range led to another leg higher into $1.85 in February 2023, from which price has retraced back into the original range. Trendline resistance continues to cap the pair and we have spent several weeks in between $0.84 and prior support at $1.04 as range resistance. I am keen to build a spot position in AZERO but given the structure at present I am going to be very tight with my invalidation – I will be buying this range but exiting on a close below $0.80, as there is no support below that back to the all-time high. If I do have to exit, I will look to rebuy on a reclaim + trendline breakout or on a sweep of those all-time lows.
And that concludes this week’s Market Outlook.
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