Market Outlook #234 (20th August 2023)
Hello, and welcome to the 234th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Cardano, Tron, Polkadot, Cosmos, THORChain and AllianceBlock Nexera. I have focused here on many of the large-cap layer 1s to gain a clearer perspective on where we are more broadly in the market cycle.
As ever, if you have any requests for next week’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $26,078
Market Cap: $507.577bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly chart that we finally got some volatility this past week, albeit in the less expected direction given the prior structure. Price sold off from the weekly open at $29.3k, where it sat right on that trendline support, and retraced almost all of the June rally back into $25.2k, where it bounced and is now set to close above $26k. We are now back below the 200wMA and multiple levels of support, with only the prior swing-low around $24,6k left untested. Whilst this is obviously less bullish for short-term trajectory given that breakdown from trendline support and the retracement of the June rally, what is important to consider is that we now have the formation of a range between $25k as range support and $31k as range resistance. Whilst I doubt that we have dumped this hard to leave $24.6k untouched, what may be worth watching for here next week is continuation of this downside through $24.6k followed by an immediate reversal and reclaim of $25.3k as support – if we see that, I will be looking for reasons to long back towards that 200wMA and beyond into reclaimed resistance at $28.7k. Unless we close the weekly candle below $24.6k, weekly structure is also still bullish. In the event we do close back below $24.6k, that would start looking quite bearish given the promising structure since that Nov bottom and I would expect to see $22.5k retested as prior resistance turned support.
Turning to the daily, we can see here that we have also lost the 200dMA here, which had marked the bottom back in March, but we have not yet tested the 360dMA since clearing it back then. As such, it would not surprise me if this short consolidation above $25k is followed by a second dump into $23.6k to trap breakout shorts and then see a reversal and reclaim of those key support levels. Alternatively, if somehow bulls are able to defend the higher-low at $24.6k, signs of recovery would begin with some daily structure forming with a higher-high and higher-low that leads to a reclaim of that 200dMA at $27.3k. Let’s see how this next week unfolds…
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1,665 (0.06386 BTC)
Market Cap: $200.223bn
Thoughts: Beginning with ETH/USD, on the weekly we can see that price of course lost that local pivot at $1847, dumping from the open through multiple minor support levels all the way through the prior swing-low at $1616 and the 200wMA into $1540 before bouncing, now set to close back above those two key levels. This during another set of circumstances might just look like a good sweep of key liquidity but given how BTC is looking I would be surprised if we did not see this week’s low taken out before signs of a reversal begin to form, with $1508 being one level of importance, followed of course by $1410. If we drop into the daily, we can see how the 360dMA acted as support, with price wicking below it but failing to close through it, bouncing back into $1664 around which it is currently consolidating. Daily structure is bearish here, as is momentum, but that strong sweep of a key swing-low followed by a show of strength from bulls is somewhat promising. Nonetheless, until BTC starts to print recovery signals, I doubt we will see much beyond chop (or that second push lower) for ETH. Looking ahead, however, I think we would be wise to enter dip-buying mode as soon as that 200dMA at ~$1800 is recovered, as I fully expect to see $2425 traded once that is reclaimed as support.
Turning to ETH/BTC, we can see that the pair continues to trade within its short-term range, bouncing off weekly lows at 0.0606 into 0.0639, around which it is set to close, still marginally below the key 0.0645 level. Looking at the daily briefly, we can see how sharply the pair swept all of the recent support into that June low, then reversed hard to close back above 0.0622 support. This is a very promising sign for the underlying strength of ETH, in my view, and given how long we have now been trading inside this range it is starting to look more like trendline resistance (and the 200dMA) from the August 2022 highs will come to price rather than price move to it, with a breakout in perhaps September from both the range and that key resistance cluster.
Cardano:
ADA/USD
Weekly:
Daily:
ADA/BTC
Weekly:
Daily:
Price: $0.265 (1017 satoshis)
Market Cap: $9.295bn
Thoughts: If we begin by looking at ADA/USD, we can see that weekly structure is bearish but the pair has been range-bound since the December 2022 bottom, with $0.24 as range support and $0.42 as range resistance. More recently, the pair bounced off the bottom of the range right into prior support at $0.33, which acted as resistance, confirming that bearish structure, with price then retracing as of this past week into range support. We have already swept the bottom of the range once but if BTC takes another tumble it would not be a surprise to any of us if $0.23 gets swept again, with $0.20 as support below that. What I think might be a nice bottoming signal here would be a strong wick into $0.20 followed by a weekly close back above $0.24. In that scenario, I am looking for reasons to long. As I’ve mentioned previously, I am no longer looking for short exposure beyond intra-week positions in alts because we are over two years into a bear market at 95-99% drawdowns across the market, so I am just looking for the next strong signal for a reversal. If we drop into the daily, we can see that there was a nice bounce off $0.237 right into some resistance at $0.274, which is currently capping the pair, with short-term trendline resistance also forming a cluster with that 200dMA, 360dMA and prior support right around $0.33. Clearing that would be a hugely promising sign for bulls, but undoubtedly that is unlikely to come this week…
Turning to ADA/BTC, we can see how trendline resistance from the Sept 22 highs continues to cap the pair, with it having formed a fresh range between prior resistance turned support at 950 and prior support turned resistance at 1175 for several weeks. Below this range support, there is no support at all for another 25% fall into 708 satoshis, which is something to keep in mind. What is clear is that the most bullish signal here would be for this range support to hold and price to begin pushing through 1175, breaking trendline resistance as well as turning weekly structure bullish. That’s the green light for dip-buying season on ADA, in my view.
Tron:
TRX/USD
Weekly:
Daily:
TRX/BTC
Weekly:
Daily:
Price: $0.075 (286 satoshis)
Market Cap: $6.658bn
Thoughts: Looking at TRX/USD on the weekly timeframe, we can see that the pair continues to trend higher from that Q4 22 bottom, more recently wicking into resistance at $0.089 before rejecting and now retracing into prior resistance turned support at $0.071, still holding that trend of higher-lows. We do have some bearish divergence on this most recent push higher to contend with, but unless we start to close the weekly below $0.071 I think the trend still looks good. If we do lose this support, then $0.065 comes into view as the prior swing-low, below which weekly structure would turn bearish and we would likely retrace back towards that 200wMA at $0.055, so that is certainly something to be mindful of if you have long exposure for Tron. Turning to the daily, we can see how daily structure is bearish but the pair has retraced into the 200dMA and bounced, much like previous retracements during this uptrend. We are now pushing into prior support at $0.0756, so any rejection there would be an early warning sign of at least a 200dMA retest. If we clear $0.075 and $0.078, I think it is likely the trend continues with another test of $0.09 resistance on the way.
Turning to TRX/BTC, we can see how we have something of an ascending triangle forming into long-term resistance and prior trendline support turned resistance, with higher-lows since March but price capped on two attempts by 315 satoshis. If we drop into the daily for more clarity, we can see how price most recently formed a higher-low above the 200dMA, with resistance now being found on two attempts at a 360dMA breakout, which also capped the pair in May. Given this structure, whilst a small retracement off this resistance would be unsurprising, I would expect to see another push higher into 315 follow, with any daily close through that level opening up 350 as the final major resistance level before clear skies to multi-year resistance at 466. Not much else to add here for now…
Polkadot:
DOT/USD
Weekly:
Daily:
DOT/BTC
Weekly:
Daily:
Price: $4.48 (17,196 satoshis)
Market Cap: $5.676bn
Thoughts: Beginning with DOT/USD, we can see how brutal this bear market has been, with a 93% drawdown into the December 2022 low at $4.21, a v-reversal into $7 in February and a subsequent slow bleed all the way back into that current cycle low, where it continues to be tested. We have recently found resistance at $6.01 and retraced back into that support at $4.42 again, just above the December lows, but we have a series of lower-highs and a flat bottom that has been poked at on multiple occasions. I would be very surprised if we don’t at the least wick through this cluster of support before forming the actual cycle low, and so I am looking for a sharp move below $4.21 followed by a reclaim of the level as range support before I look to get involved. Dropping into the daily, we can see how the 200dMA and 360dMA are both capping the rallies once again, so any clearance of the two MAs will begin to look more promising for a sustained reversal.
Looking at DOT/BTC, we can see the pair is now in a downtrend that has persisted for 819 days – since the May 2021 highs. That is very brutal indeed and we have recently broken below the December 2020 low at 1783 satoshis, formed support at 1564 and are now consolidating between there and prior support at 1890. This range has now hold for a couple of months, and this flattening of volatility is to be expected after such a deep, drawn out bear market. We have literally zero major support now into the all-time low at 1184, so if 1564 gives way we are likely to gravitate towards that level. However, assuming this range is the bottoming range, a weekly close above 1900 satoshis would be the first sign to look for, turning structure bullish. If we drop into the daily, we can see how we have some sense of structure here with price reclaiming support at 1639 after retesting the 1564 bottom and pushing up towards prior support at 1783, below which it currently sits. 1639 should now hold firm as reclaimed support for this bottoming scenario to be validated and we should then see the pair reclaim 1783 as support; looking ahead, I am expecting 1890-2100 satoshis to be the real battleground for the DOT reversal, with clearance of the latter level confirming the beginning of a bull cycle for me.
Cosmos:
ATOM/USD
Weekly:
Daily:
ATOM/BTC
Weekly:
Daily:
Price: $7.75 (29,704 satoshis)
Market Cap: $2.266bn
Thoughts: Beginning with ATOM/USD, we can see from the weekly that price has been bleeding lower since rejecting at local trendline resistance at the beginning of the year, losing the 200wMA and breaking back below prior support at $10.28, which is now acting as resistance. We then broke below December 2022 lows at $9 into $7.30, which is barely holding up at present, with both structure and momentum pointing to further downside. Right now, I would not be touching this at all. Rather, I am either looking for that $5.50 low June 2022 to be swept before jumping in, or I am looking for some momentum exhaustion to form above that and then look to jump back in when we see weekly structure turn bullish again. Beyond that, I don’t seem much reason to look for long exposure at the moment, given how weak this looks relative to other large-caps…
Turning to ATOM/BTC, what is more promising on this pair is that we have now retraced back into the historical support level that has preceded huge rallies at 25.6k satoshis, bouncing off it and set to close at weekly highs back just below 30k satoshis. This is one sign of life on ATOM At present, but we still have bearish weekly structure and no momentum exhaustion. Nonetheless, if we start to close the weekly back above 30.6k satoshis from here, then it begins to look like something worth paying attention to again. If we drop into the daily for some clarity, we cab see the v-reversal off the test of that key support level this past week, with price pushing straight back above minor support turned resistance at 29k satoshis, now sat between there and 30.6k. If we look at the previous bottom in June 2022 from this level, we literally v-reversed the entire May-June dump in a couple of weeks and continued rallying into September. If we see something similar begin to occur here, It’s unlikely we get a lot of dips to get involved in, so that clearance of 30.6k and reclaim as support would be your best bet if you want long exposure…
THORChain:
RUNE/USD
Weekly:
Daily:
RUNE/BTC
Weekly:
Daily:
Price: $1.76 (6742 satoshis)
Market Cap: $527.311mn
Thoughts: If we begin by looking at RUNE/USD, we can see from the weekly that price has bounced hard of what is likely to be cycle lows at$0.79, having consolidated between there and prior support at $1.05 for a couple of months before pushing hard this past couple of weeks on growing volume through multiple levels of resistance, turning weekly structure and momentum bullish. This is without doubt what you should be looking for on altcoins as they emerge from their cycle lows, as it gives little opportunity for people to jump on board and induces FOMO. That said the pair is now pushing up into a large cluster of resistance below $2 and it would not surprised me to see late longs get trapped here. If we look at the daily, we can see how the pair cleared the 200dMA and 360dMA, the latter of which had not been traded above since April 2022, but is now forming some bearish divergence into the most recent highs. I would be very keen to jump in if we see a dip back towards $1.43, with a wick through that local swing-low to clear out some liquidity being a high R/R area to look for longs if we get the chance. Ultimately, as long as this now holds above $1.22, I think it is very likely the bottom is in and this rally will emerge into the next stage of the bull cycle for RUNE, with $3 as major resistance in the coming months, followed by $4.40.
Turning to RUNE/BTC, we can see how price was extremely tightly wound between 2500 and 3000 satoshis before emerging from the range and rallying this past week through months of bleeding right into prior support turned resistance around 7700 satoshis, with that level acting as resistance and price now set to close back near 6600 satoshis. We are sitting around a cluster of resistance here, providing confluence for a small retracement before the next leg higher to tackle the most important resistance cluster – the 200wMA and long-term trendline resistance. If we drop into the daily, we can see how sharply all of the summer months of downtrend have been erased, which is very promising, an I would be looking for a higher-low formation above 4782 to mark out the bottom before we continue into 8600 satoshis and beyond. A weekly close above that trendline is as green a light as once can get for what is likely to come, which in my view is a prolonged period of outperformance back towards 19k as major resistance…
AllianceBlock Nexera:
NXRA/USD
Daily:
NXRA/BTC
Daily:
Price: $0.062 (238 satoshis)
Market Cap: $45.771mn
Thoughts: As NXRA has only been trading for a few months, I will focus here on the Dollar pair.
Looking at NXRA/USD, we can see that the pair began trading in late February, dumping into an all-time low at $0.043 before rallying for a couple of months into an all-time high at $0.11 in mid-April. Since, it has retraced much of those gains but importantly formed a higher-low in June at $0.047, then rallying into reclaimed resistance at $0.0808, where it formed a double top in July. We have since seen the pair chop around above $0.061, and I am looking to build a spot position around $0.055 if I can get it, with $0.047 as invalidation and looking for fresh highs and beyond. The pair has barely moved, all things considered, since beginning trading, and given the formation of that higher-low I am happy to be involved as long as it is protected. If we lose it, the trend looks bearish with only the all-time low to support price, and the last thing I want is a spot holding in bearish price discovery for a newer token; price discovery cuts both ways. If the trade is correct and we are forming a higher-low here above the June lows, I would expect new all-time highs later this year and look to hold until we see signs of momentum exhaustion on the higher timeframes.
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.
