Market Outlook #232 (5th August 2023)
Hello, and welcome to the 232nd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Solana, Arbitrum, Algorand, Magic, Merit Circle and Vulcan Forged.
As ever, if you have any requests for next week’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $29,009
Market Cap: $564.186bn
Thoughts: If we begin by looking at BTC/USD on the weekly timeframe, we can see that price has wicked both above prior support turned resistance at $29.4k and below the previous weekly low into $28.5k, but is now sat somewhere in between, set to close the week out back above $29k. As mentioned last week, a close below the prior weekly low and below range support at $28.7k would be a sign of weakness and likely lead to a deeper retracement, but a close back above $29.4k after taking out the prior weekly low would be a good show of strength and possibly a bottom signal. We currently have neither and are in limbo during the low volatility weekend. Whilst we still have Sunday to pull in either direction, this is not currently presenting much by way of clarity. If we do close here, I will be sitting on my hands early next week unless we get a flash dump into $27.3-27.5k, where I would like to be a buyer. If we close below $28.7k, I will be looking for intraweek short exposure towards that $27.3k area – the reason I would not be looking for short exposure if we close this week above $29k despite stating my intention to buy $27.3k is that I am not expecting the downside to come unless we close below the prior weekly low; thus, I am weighing the probability of a move lower as much less likely if we do just chop around in this limbo zone all weekend. If we manage to push higher and close above $29.4k, I will be looking to buy the dip early next week for another test of $31k. Three clear plans on some relatively unclear price-action.
Looking at the daily, we can see how we wicked beneath the prior weekly low into range support and bounced hard, closing that day back above $29.4k – that was a really nice signal for continuation higher if the momentum had sustained, but instead we saw price immediately reject and break back below local support, now chopping between the two levels. As mentioned, what I’d ideally be looking for now from a buyer’s perspective is either that strong reclaim and hold above $29.4k on Monday – or a wick below that trendline. One thing to consider is that we’ve now effectively been topped out for 6 weeks and have barely moved off that $31k resistance, whereas on the prior top at $31k in April we retraced back to near $25k within that same duration. Right now, despite the bearish sentiment, it does not seem to me that bears have much hold here, and with the amount of support below us all the way up from $25.4k I just don’t see much point in holding short exposure beyond the span of a week.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1,831 (0.06314 BTC)
Market Cap: $220.148bn
Thoughts: Beginning with ETH/USD, once again we have spent a week consolidating in a tight weekly range but still right around that $1847 pivot. At present we are set to close the week marginally below it but by no means a significant or convincing close through support. We have not even taken out all of the cluster of weekly lows yet. That said, this slow bleed into support would suggest some sort of flash dump through it is likely, if only as a sweep of liquidity during these low volatility conditions. Looking at this, I would expect next week to see a wick through the lows towards $1763, where, if we can find some demand and push back above $1847, I think we have the makings of a local bottom and can expect another test of $2037 to follow. Looking at the daily, we are also sat right above the 200dMA here, which acted as support for both the previous local bottoms, which is something to keep in mind. I would ideally love to see a wick early next week into $1763 and then price to regain control of $1847 going into the weekly close, following which we can look for long exposure for that retest. Unless we start to accept below $1763 next week, I’m not too concerned – if we do, however, then I’m looking at the 360dMA at $1619, where the previous swing-low is also sat.
Turning to ETH/BTC, we can see that price continues to chop around inside this tight range, with this week’s range tightening even further than the previous. If we look at the daily for clarity, we can see how this week’s price-action has been spent entirely inside the previous week, with a higher-low and lower-high formed. From here, I would expect to see 0.0645 breached as long as 0.0622 continues to hold as support – lose that support and all of this structure gets invalidated and we likely begin another leg lower towards at least 0.0594. For now, however, it remains strong and price is already pushing off this higher-low, so it’s honestly just a patience game now – one side of the range will break and I am leaning 70/30 towards 0.0645 being reclaimed as support in the next week or two, from which point we can expect continuation higher into long-term trendline resistance.
Solana:
SOL/USD
Weekly:
Daily:
SOL/BTC
Weekly:
Daily:
Price: $22.61 (77,932 satoshis)
Market Cap: $9.16bn
Thoughts: Beginning with SOL/USD, we can see on the weekly timeframe that the pair has bullish weekly structure and bullish momentum but topped out around prior support turned resistance at $30 a few weeks ago, retracing since back into reclaimed support around $22 above which it is currently sat. To be honest this is a very minor level of support and I am more concerned with holding above the broader $19-22 range, as within this range is a cluster of previously significant levels. Given structure and momentum, I expect SOL to form a higher-low within this range, where those on the sidelines may look to get involved, and price to continue higher from there toward $35.60 and $47 following that. Dropping into the daily, we can see that price has just broken daily market structure turning it bearish with this most recent swing-low, but we are sat right on a huge cluster of support here – the 200dMA and 360dMA converge with a local support level around $22. As such, I would expect to see that low begin to form in the next week or so around here and then I am looking at a daily close through $25.76 to confirm the next leg higher – once we’re above that level it is dip-buying environment into $36.
Turning to SOL/BTC, we can see that the pair capped out exactly where one might expect: long-term trendline resistance. That trendline has capped the pair since November 2021 but we do now have bullish weekly structure and momentum curving higher. I would expect the pair to move a little lower from here to retest 70k satoshis as support, but given that is both a historical support level and the weekly open of this expansive candle higher, I would expect that area to hold firm and for a higher-low to form there. Lose that and I think we retrace towards 61k satoshis. Assuming we do form a higher-low around 70k, I would then expect to see a push through that trendline, which should be all the confirmation anyone needs that the cyclical bottom is in and the next cycle of outperformance for SOL has begun. Again, dropping into the daily, we can see how the 360dMA is sat just above that trendline and has not been breached for well over a year now. That 100k satoshi level is a really significant one, both psychologically and structurally – weekly close through that level and I think you hold off the red button on SOL for quite some time.
Arbitrum:
ARB/USD
Daily:
ARB/BTC
Daily:
Price: $1.14 (3926 satoshis)
Market Cap: $1.451bn
Thoughts: As ARB has only been trading since April, I have focused here on the Dollar pair.
Looking at ARB/USD, we can see that the pair retraced 50% off the all-time high at $1.82 between April and June, forming an all-time low at $0.91. Since then, the pair has turned daily structure bullish once again, rallied for several weeks, and most importantly reclaimed the April support at $1.11, which was the support that preceded the run to all-time highs. We formed a local top at $1.35 in mid-July and have retraced back into $1.11 since, now holding marginally above it. The trend is still broadly pointing higher from here whilst we hold above $1.11, but if we start to close back below that I would expect the triple bottom at $1.06 to get blown out before any reversal. If we do hold $1.11, I would look for a close back above $1.21 and then jump in for the next leg of the trend, with $1.44 as the first target, followed by $1.57. Not much else to add here, to be honest – structure is very simple.
Algorand:
ALGO/USD
Weekly:
Daily:
ALGO/BTC
Weekly:
Daily:
Price: $0.105 (365 satoshis)
Market Cap: $826.644mn
Thoughts: If we look firstly at ALGO/USD, on the weekly we can see that price is sat right above that all-time low, with bearish weekly structure and no real sense of support here. This is not particularly attractive at all as of yet, despite the 97% drawdown from the 2021 highs. We are still also well below local trendline resistance from the October 2022 highs. In short, this looks fucked at the moment and until we see some positive structure begin to form I would not be getting involved. If we look at the daily for clues as to what we structure we should be looking to form, we can see that long capitulation wick into the all-time low at $0.09 followed by a bounce into $0.144 followed by a retracement now into $0.10. Now, what bulls want to see is this $0.10 low hold as a higher-low above the ATL. From that point, a push higher through $0.113 to reclaim that local support would be the first promising sign, followed by another higher-low above it and then a breakout move beyond $0.144 and local trendline resistance. If we see that, then I will look to get involved above $0.15. Until then, no bueno, particularly when it looks likely that $0.10 does not hold, with only the all-time low to support the pair below it.
Turning to ALGO/BTC, we can see that the pair is in a precarious position, having clung firmly to trendline resistance for months, steeply breaking fresh lows into the all-time low at 350 satoshis a couple of months ago. Since, it has consolidated above 350 but remained both below trendline resistance and with bearish weekly structure (see how prior support at 412 is now resistance. If this trendline continues to cap the brief rallies, the pair is going to break fresh lows next week and continue bleeding out, which is obviously not where you want to be jumping in. Rather, it makes sense to wait either for a strong push higher through this trendline and above 412 satoshis (turning weekly structure bullish) or to wait for some sort of weekly divergence to form on the next push lower than indicates momentum exhaustion. For now, not touching this.
Magic:
MAGIC/USD
Daily:
MAGIC/BTC
Daily:
Price: $0.733 (2530 satoshis)
Market Cap: $162.131mn
Thoughts: Much like ARB, both pairs look virtually identical for MAGIC given its relatively short existence, and so I will focus here on the Dollar pair.
Looking at MAGIC/USD, we can see that the pair has been capped by trendline resistance all of 2023, forming a local top at historical resistance around $2 and retracing since, back below both the 200dMA and 360dMA into reclaimed support at $0.60 in June. That support held firm and price has since pushed higher but rejected once again below that trendline, now looking to form a higher-low at $0.70 but sandwiched between there and prior support at $0.78. Looking at this, until we see a strong breakout above the trendline, I am not looking to jump back into a MAGIC position – what I am ideally looking for here is the June low to hold and price to close above trendline support, then look to buy as close to $0.78 as possible as reclaimed support, then looking to add to that position on a strong move back above $1.10. If we see something resembling that, I will be keen to hold that position into the $2.20 retest, with $4 the major target above that. If, however, this support does not hold and we break below the June lows, I am only really interested back near $0.37 as major support.
Merit Circle:
MC/USD
Daily:
MC/BTC
Daily:
Price: $0.238 (819 satoshis)
Market Cap: $100.936mn
Thoughts: Again, as both the Dollar and BTC pairs for Merit Circle look largely identical since inception, I will focus here on the Dollar pair.
Looking at MC/USD, we can see that price has been in a downtrend since trading began in December 2021, with the 200dMA having never been breached during that time and capping every major rally. We put in an all-time low at $0.161 in June and have since formed support above that at $0.177 and are now looking to reclaim support above that at $0.215, turning daily structure bullish with the most recent push higher. Whilst these are promising signs – and I have rebought my MC around $0.18 – until we break and close firmly above $0.26 this is all too familiar with the Q1-Q2 price-action. That said, given the pair is literally 99% off the all-time highs and there has been a huge influx of volume around these recent lows, I am happy with my spot position and looking to add if we do reclaim $0.26 as support. Above that level, I think we catapult higher into the $0.37 region before finding any other resistance. I am looking to hold my position for a full cycle, however, and so will not be looking to sell anything until at least new market cap all-time highs above ~$450mn. Invalidation is fresh all-time lows.
Vulcan Forged:
PYR/USD
Weekly:
Daily:
PYR/BTC
Weekly:
Daily:
Price: $3.07 (10,531 satoshis)
Market Cap: $73.001mn
Thoughts: Looking firstly at PYR/USD, we can see that the pair has been held above support at $2.61 for 448 days now, which is time capitulation at the extreme. Even the most ardent holders will be getting itchy feet in this sort of range and that is precisely where the cycle begins to shift. As keen readers will know, I have a position in PYR with an average price of about $3 and I have now filled my entire allocation. Invalidation is a weekly close below $2.61 (15% or so of downside risk) and I am very much looking to hold for the bulk of the next cycle. Looking at this, we have volatility dampening since the February high at $4.58 and price and volume are both compressed whilst the range continues to hold firm. The first signs of reversal for me will be when weekly structure and momentum begin to bullish, which at present would be a close back above $3.94. If we see that and then form a higher-low subsequently, I would expect to see the top of the range at $5.28 retested, where a weekly close above that level begins the disbelief rally, in my view.
Turning to PYR/BTC, we can see that the pair has been consolidating between resistance turned support at 9600 satoshis and reclaimed resistance at 11.5k satoshis for around 6 weeks now but momentum indicators are pointing to exhaustion on this most recent push lower, with strong divergence. If this is the bottom for the pair, we should now see a move back above 11.5k and that level to act as support once again, with a weekly close through 13.9k satoshis confirming the reversal is underway for me, as we then have bullish weekly structure following momentum exhaustion after a two year bear market. If we close the weekly below 9.6k satoshis, however, there is no real support all the way back into 6k, so I would be watching the Dollar pair very carefully for invalidation of that spot position. Let’s see how the next couple of weeks unfold…
And that concludes this week’s Market Outlook.
I hope you’ve found value in the read and thank you for supporting my work!
As ever, feel free to leave any comments or questions below, or email me directly at nik@altcointradershandbook.com.
