Market Outlook #231 (30th July 2023)
Hello, and welcome to the 231st instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Dogecoin, Avalanche, Optimism, Energy Web, OriginTrail and XCAD Network.
As ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $571.462bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price pushed lower this week, wicking below local support at $29.4k but now set to close the week out at right around that level, trading on lower volume over the prior week. This wick below four weeks of untapped lows is a good start for a possible bottom, but bulls want to see the pair continue to push off this sweep early next week, with acceptance back above $29.4k opening up the likelihood of another test of $31k resistance. Only when we see that weekly close above $31k will I start to consider the next leg higher, for which I obviously want long exposure. However, if this wick is not sufficient liquidity to fuel the push higher, we should see price continue to break lower next week, with any move below this week’s low at $28.8k making it highly probable that reclaimed range support gets retested at $28.2k, where failure to hold there would indicate to me a deeper retracement is required, likely into the 200wMA at $27.1k. In fact, if we do start to break down next week, what I will be watching for in particular is a wick below that trendline support into $27k, where I would look to be a buyer with a view to add if we then close the week back above $28.2k.
Dropping into the daily, we can see that price closed below local support but then failed to continue moving lower, instead consolidating for several days between $28.7k and $29.4k. Daily structure is obviously bearish here given the lower-low, but I’m more focused on the possibility that this move below $29.4k has been a deviation of the range if we then reclaim it as support. If this range is distributive, that level should act as resistance this week and we should break below $28.7k pretty sharply early next week. Potentially a volatile week incoming after weeks of compression.
Price: $1877.91 (0.06389 BTC)
Market Cap: $225.682bn
Thoughts: If we begin by looking at ETH/USD, the pair continues to hold above the $1847 support for the fifth consecutive week. This lack of desire to break key support is promising, but the build up of untapped lows in this area presents a problem: I find it highly unlikely given the multi-week consolidation that all these lows don’t get swept, so, if BTC moves as it may below $28.8k, then we will see $1847 get run and hopefully all of the prior five weekly lows taken out into the next level of support at $1763, where I would imagine bulls step in and we trap breakdown shorts. This is, of course, assuming we are to continue moving higher. If we instead see a weekly close below $1843, I would expect to see further downside and a deeper retracement towards potentially that 200wMA as mentioned in the previous post. Dropping into the daily, we can see this cluster of lows more clearly, with the 200dMA also lining up nicely with that reclaimed support level below – again potentially an area to take a punt at a long with a view to adding on a weekly close back above $1847 and cutting if we close below it.
Turning to ETH/BTC, we can see that the pair continues to hold above reclaimed support and is set to close the week out near weekly highs at 0.0642. That being said, we remain trapped inside this tight range between prior support turned resistance at 0.0645 and reclaimed support at 0.0622. If we start to push through that local range resistance next week, I would expect the pair to make its ascent towards the trendline in August, and as I have mentioned many times until we break and close through that trendline on the weekly it is wise to hedge any long exposure as we come into it, as what has followed for a year is a series of lower-lows from rejection there. If and when we do close through that trendline, I think it is very likely this downtrend ends and that 0.071 swing-high becomes the next key level, with a weekly close above that turning weekly structure bullish. But that is likely still months away. If we drop into the daily, we can see how price has been printing higher-lows off the 0.0605 low but continues to be capped at 0.0645 – an ascending triangle of sorts is forming and as long as we form a higher-low above 0.0622 this coming week I think it is likely we do break higher out of this range…
Price: $0.0797 (271 satoshis)
Market Cap: $11.184bn
Thoughts: Beginning with DOGE/USD, we can see on the weekly that price has been range-bound for the best part of 440 days, only briefly breaking above range resistance at $0.092 during that period. Price recently formed a swing-low above the 360wMA and has been rallying for weeks since, reclaiming support at 0.0656 and now pushing up towards the top of the range again. Of course, if you have long exposure, it is likely wise to hedge or exit as the pair approaches that 200wMA and range resistance at $0.092. Until we get a weekly close through that level, it is low R to be holding long exposure in that area, as price has fallen back towards $0.0656 every time. If this is the breakout move, we’ll likely see a strong candle out clearing $0.10 and then retrace back towards the level to test it, also likely front-running it – in that scenario, I’d be looking to jump in around $0.11 with invalidation on a close back below the 200wMA, looking for $0.15, followed by quite literally the moon if we clear that level. Now, if the range persists and we reject the 200wMA over the next week or two, I am looking to be a buyer at $0.066 with invalidation at $0.053.
Turning to DOGE/BTC, we broke through trendline resistance from the Q4 2022 highs and are set to close the week marginally back above the 200wMA at 264 satoshis. Weekly structure is still bearish but we wicked below the May 2022 lows and v-reversed through resistance, which makes me think the cycle low for the pair is in here and we are likely going to form a higher-low above 220 that leads to a breakout beyond reclaimed resistance at 290. Accept above that level and I think we get 25% of upside before any resistance is found. Briefly looking at the daily, we can see that price is also pushing up against the 200dMA here, providing confluence for the importance of the breakout if we can hold above 290. Not much else to add here for now.
Price: $13.36 (45,461 satoshis)
Market Cap: $4.628bn
Thoughts: Looking firstly at AVAX/USD, we can see from the weekly that price wicked below the December 2022 low at $10.46 several weeks ago and bounced, rallying for 7 weeks since and reclaiming support at $12.08. Price recently pushed up into reclaimed resistance at $15 but rejected a move back above that level, now consolidating right around prior support at $13.60. From here, holding above $12.08 is key, as losing that opens up another leg lower through the $10.46 support area towards $9.30, particularly as weekly structure remains bearish here. However, if we can hold this reclaimed support level, I would expect another test of $15 to follow, with acceptance above that leading to a sharp 20% rally into $18 as the next resistance level. If we drop into the daily for clarity, we can also see how the confluence of the 200dMA and 360dMA are acting as resistance, with the latter moving average having capped price back in April too. A clean breakout beyond both of these would begin to look very much like the beginnings of the next cycle, in my view…
Turning now to AVAX/BTC, we can see that price has been consolidating above resistance turned support at 42k satoshis for several weeks, range-bound between there and support turned resistance at 48.5k. Price also continues to be capped by trendline resistance that has held for all of 2023 thus far. The play here is quite simple given this market structure: a weekly close above 49k satoshis clears both trendline resistance and prior support and I think we can start looking at adding long exposure from that point. If we drop into the daily briefly, we can see how momentum is starting to point towards higher prices here and as long as that higher-low above 42.1k satoshis holds firm, I think we do see that breakout. Following the breakout, I will be looking to buy as close to 48.5k as possible, hedging any exposure around 60k satoshis where there is a huge cluster of resistance and then beyond that the pair begins to look like disbelief, given the reclaim of the June ’22 capitulation low.
Price: $1.57 (5359 satoshis)
Market Cap: $1.069bn
Thoughts: As Optimism has only been trading for a year, I will focus here on the Dollar pair, as both pairs look virtually identical at present.
So, looking at OP/USD, we can see that the pair has been in a broad uptrend since inception, with large multi-week retracements (verging on mini-bear cycles) with each successive high. The most recent all-time high form at $3.31 in February and price retraced all the way to $0.89 from there, though still higher than the prior low at $0.66 from mid-October. Since putting in this low, price has been in an uptrend, with momentum indicators pointing upwards and price recently breaking above prior resistance at $1.48. We have since been range-bound for a couple of weeks between there and resistance at $1.65, with the 360dMA also sat right around here. Assuming the trend continues to hold, one would expect a daily close above $1.65 to lead to the next leg higher, with $1.81-2.03 being a huge resistance cluster to overcome. As long as the pair can hold above $1.40, I think we see that push higher – if we lose these recent swing-lows, I’d look to be a buyer down near $1.27. Looking longer-term, I think it is highly likely this broad uptrend persists and once the pair gets above $2 I would expect to see continuation towards and beyond that all-time high. Effectively, we are in a strong dip-buying environment for OP ever since that June low formed – make hay whilst the sun shines.
Price: $2.69 (9152 satoshis)
Market Cap: $126.902mn
Thoughts: If we begin by looking at EWT/USD, on the weekly we can see that price has been in a tight consolidation range for months at this point, having initially formed a range back in May-August 2022 right around these prices, then retesting support at $2.27 in May 2023 and now chopping around above it and below prior support at $2.81. This very much looks to me like a bottoming formation and I continue to hold spot EWT with invalidation on a weekly close below the all-time low. If you are looking to get involved, anything below $2.81 seems like a fair price for a long-term spot position in my view, and I expect once we get a weekly close above $3 we will see acceleration similar to that of August 2022. Looking much further ahead, only when we break and close through $4.60 do I expect the disbelief to really kick into gear as we reclaim historical support that has capped the pair for over a year. Not much else to add here – super clean structure.
Turning to EWT/BTC, we can see similar structure here, with support at 8300 satoshis having now held firm for 441 days and price having been in a bear market for three years at this point. More recently the pair has been re-accumulating between support at 8292 and resistance at 10.7k satoshis and – though I would not be surprised to see one final wick through to a fresh all-time low that acts as a spring around 7500 satoshis – I am now just waiting patiently for that range breakout to lead to the next bull cycle for EWT. This is one of the structurally more attractive projects I have seen – again, very little to add for now, just patience.
Price: $0.252 (857 satoshis)
Market Cap: $96.326mn
Thoughts: Looking firstly at TRAC/USD, we can see that price has held above support at $0.137 for 406 days, having spent months capped by resistance at $0.30, then breaking through that level and rejecting up near $0.46 earlier this year. Since then, the pair has retraced much of these gains, turning weekly structure bearish and losing the 200wMA once again, with $0.30 now acting as reclaimed resistance. That said, we currently have a swing-low in place around $0.20 and I would be either looking for a deviation below that low into the major support cluster between $0.14-0.18 that leads to a reclaim, or for price to actually form a higher-low above $0.20 and then break and close back through the 200wMA. In that latter scenario, I think it makes sense to buy the dip back into the $0.30 as resistance turned support, as that level is very clean (and tight) invalidation for long exposure. In the former scenario, I would look to enter 50% between $0.14 and $0.18 and 50% on a reclaim of $0.20.
Turning to TRAC/BTC, we can see that the pair has been sandwiched between support at 700 satoshis and the 200wMA for several weeks now, but more broadly has spent the past year between 700 as support and 1160 as resistance, other than a ‘test pump’ type of false breakout back in Q1. Obviously, if this starts to break below 700 satoshis having held above it for as long as it has, it is likely we move much lower into the next major support at 405, so I would not be holding any long exposure if we see a weekly close through 700. However, if we wick through 700 and then push back above it, that would be a nice ‘spring’ for the reversal and a weekly close through 1160 is what I am looking for to confirm that the next cycle is beginning…
Price: $1.41 (4812 satoshis)
Market Cap: $60.656mn
Thoughts: As both pairs for XCAD look identical here, I will focus on the Dollar pair, as that is also what I am basing my spot positioning on.
Looking at XCAD/USD, we can see that the pair has been in a bear market since the December 2021 all-time high but found support at $0.65 in June, rallying sharply since then and reclaiming support at $1, continuing higher from there into prior support at $1.38 where it is now consolidating. The 360dMA is also sat right here as resistance, which capped the prior rally in March that led to the next leg lower in this long-term downtrend. As such, I have sold my spot position here right around $1.35 and will be looking either to re-enter on a retracement into $1 to form a higher-low or, if this is the reversal, on a retracement after a strong move through this resistance. For example, if this downtrend has ended here, we should see a break higher through the 360dMA towards $1.72, and I would be keen to then buy any dip back towards the 360dMA (likely a little higher) as resistance turned support. My general view is to hold XCAD after the rebuy for the next 6-12 months, as I expect new all-time highs to follow in 2024.
And that concludes this week’s Market Outlook.
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