Market Outlook #240 (8th October 2023)
Hello, and welcome to the 240th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Dogecoin, Chainlink, Optimism, ImmutableX, Oasis Network and XCAD Network.
As ever, if you have any requests for next week’s Outlook, do let me know.
Bitcoin:
Weekly:
Daily:
Price: $27,852
Market Cap: $543.182bn
Thoughts: If we begin by looking at BTC/USD, we can see from the weekly that price retested the trendline breakout this past week and found support at $27.2k, rallying off that into the weekly close here at $27.9k, right around the open. We did wick above the 200wMA into $28.6k but rejected there too, and right now this is leaning bullish but looking a little indecisive. Whilst we hold above $27k, we do have a trendline breakout and successful retest, so the balance of probability suggests we move higher from here, taking out the 200wMA resistance and breaking through $29k over the next week or two. However, if we reject that $28.7k level again next week and move lower, I would expect this week’s low at $27.1k to get taken out, which puts the pair in a more precarious position; close the weekly below $27k and no doubt we retrace the rest of the rally off the lows and push through $25.4k.
Turning to the daily, momentum continues to suggest higher price with no real exhaustion forming just yet, but we do have a lot of resistance capping price here at $28.1k. The pair tried to break through it twice last week but failed on both attempts, but is now consolidating right below. A sign of strength here would be an early push lower into $27.6k to find support that pushes the pair finally through $28.1k; if we see daily closes above that level, I don’t think $28.7k will act as much resistance on another attempt and we would continue rallying towards $29.4k. However, as mentioned earlier, reject between $28.1k and $28.7k next week and then close below $27.6k and we will almost certainly see an unwind through the weekly low into $27k and likely beyond. The pair is sat on a precipice.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $1619.42 (0.05821 BTC)
Market Cap: $194.963bn
Thoughts: If we begin by looking at ETH/USD, we can see that unlike BTC the pair has struggled this past week, rejecting the weekly open at $1733 and selling off from there, now ready to close the week close to weekly lows around $1620. This is right at support but the rejection following the rally and close through the 200wMA is not pretty. That said, we do have the formation of an inside week, indicating consolidation, and therefore the possibility of inside week failure. Bulls will want to see this week’s low taken out early next week if at all, followed by a rally back above $1664; if we see that, likelihood is this is a bit of a trap for shorts and a weekly close back above the 200WMA would make for a high probability long towards $1850 the following week, in my view. Obviously, if the bears retain control here following this price-action, $1508 is getting slammed, with no support below that back into ~$1410. Dropping into the daily, I have marked out what we might see if that area does get swept, where a wick through $1508 followed by a reclaim as support would be a signal to get long on the retest of $1508. Not much else to add here for now.
Turning to ETH/BTC, what more is there to say than the downtrend persists, despite the best efforts of bulls off that 0.0594 level. The pair closed at weekly highs last week then rejected the open this week at 0.062 and is now pushing right into the bottom of the multi-year range, currently sat above 0.0577. I would now expect to see this underperformance continue until we reach that 0.055 area, where the bottom of the range is confluent with the 200wMA. Again, dropping into the daily I have marked out a possible trajectory I am considering for the rest of the year should we break through 0.0577 here. I do think that 0.055 is a blind buy – but let’s see how I feel when we approach it.
Dogecoin:
DOGE/USD
Weekly:
Daily:
DOGE/BTC
Weekly:
Daily:
Price: $0.061 (219 satoshis)
Market Cap: $8.621bn
Thoughts: Looking firstly at DOGE/USD, we can see from the weekly that price has been largely range-bound for over 500 days at this point, having spent most of that time supported by $0.057, above which the pair currently sits. We have bearish weekly structure for all of 2023 but also a refusal to make any fresh lows: in short, time capitulation. Whilst DOGE holds the 2022 low at $0.049, I think it is likely we are seeing the depression stage of its market cycle, where market participants simply grow bored and uninterested and volatility diminishes for months on end. Of course, if we start to break these support levels and close below that 2022 low, then this looks vastly worse – more like a 500-day distribution range with very little support below. I am placing a much lower probability on that scenario that that after a 94% drawdown we are now seeing time capitulation. Turning to the daily, we can see that trendline resistance has capped the major highs since November 2022, but despite the most recent rejection the pair has simply consolidated above $0.057 support and below $0.066 support turned resistance, with that trendline now coming close to contact with price. I am expecting to see price just trade through this trendline and invalidate it with time – if we see that, I would look then for a rally back above $0.072 as the clearest signal to start looking for long exposure.
Turning now to DOGE/BTC, we can see that the pair rejected at reclaimed resistance at 290 satoshis a couple of months ago, holding below the 200wMA, and has since been trading lower, pushing this past week into reclaimed support at 220 satoshis. This is the level that provided massive support in 2022 before a huge run, and we deviated below it back in June, before rallying through trendline resistance. So, given this structure, this should be an area where price finds support once again, and for the brave among us we could reasonably punt a spot position here with clean invalidation at 200 satoshis. Dropping into the daily, we can see how the 200dMA is also now capping the pair, and the daily is starting to accept below reclaimed support at 220. If this level acts as resistance early next week, any spot longs should be exited early, because that June low at 202 is getting swept. Let’s see how next week unfolds…
Chainlink:
LINK/USD
Weekly:
Daily:
LINK/BTC
Weekly:
Daily:
Price: $7.59 (27,261 satoshis)
Market Cap: $4.226bn
Thoughts: Beginning with LINK/USD, much like DOGE it has been range-bound for over 500 days, in a much clearer range formation, following its 90% drawdown from the all-time high. It has also now been almost 900 days since that all-time high formed, which is quite something – and should point quite clearly to where we are in the broader market cycle. More recently, the pair has formed a higher-low above the June low, finding support at $5.70. From there, the pair has rallied all the way into major resistance at $8.50, below which it closed last week. This is the level that has marked out the top the previous three tests. This week, the pair has consolidated between that level and reclaimed support at $7.25, now set to close above that support. What bulls want to see here, obviously, is a weekly close through $8.50, leading to a push towards trendline resistance from the all-time high and the $9.75 area that has capped price since May 2022. If we drop into the daily, we can see how the pair is now consolidating above this support, with daily structure still bullish at present; lose $7.25 and that turns bearish, but the broader market structure is still bullish now that we have that swing-low above $5.69. If we drop into $6.80, I would look to open 50% of a long position with a view to add back above $7.25, or down at $6.25 if we get it. Invalidation is $5.68 and I am looking for $9.75.
Turning to LINK/BTC, after over 1100 days of being in a downtrend and being capped by trendline resistance, the pair has finally broken out with a multi-week rally, turning momentum indicators bullish and weekly structure bullish. This gives me confidence in looking for longs for LINK/USD, as I now expect the pair to continue to outperform as long as we can now hold above 2070 satoshis as support, with 3300 the next major resistance to aim for. Dropping into the daily, we can see how the pair is now back below prior support at 2872, so this will be an interesting test this coming week, with that level having marked out resistance in April and July. If we rally into that level and reject, 3069 looks like a short-term deviation of that level and we likely move back towards 2500 satoshis. If, however, we can close the daily above that, I think we rally straight into 3300.
Optimism:
OP/USD
Daily:
OP/BTC
Daily:
Price: $1.27 (4544 satoshis)
Market Cap: $1.111bn
Thoughts: As OP has only been trading for just over a year, the pairs here look virtually identical and I will focus on OP/USD.
Looking at OP/USD, we can see that price has drawn down 73% from its all-time high earlier this year, marking out what looks to be a cyclical low in June. Since the pair has rallied back up into support turned resistance at $1.81 in August but rejected at trendline resistance from the all-time high, then bleeding lower for a couple of months until it formed a new consolidation range. This range has found support around $1.27 and resistance at $1.48 since late August but we continue to test the bottom, and if we now see price accept below this area I would expect to see the $1.15 support taken out and price fall into much stronger support at $1.04, where I would be a spot buyer. If instead we deviate below this cluster of summer lows into $1.15 and then rally back above $1.27, that would be a strong signal for the beginnings of a reversal, with a trendline breakout confirming it. Let’s see how this next week or two play out, but there’s definitely something interesting setting up here.
ImmutableX:
IMX/USD
Daily:
IMX/BTC
Daily:
Price: $0.55 (1982 satoshis)
Market Cap: $666.714mn
Thoughts: As IMX has also not been trading for more than 18 months – and because I am basing my long-term spot trades for it on one specific pair – I will focus here on IMX/USD.
Looking at IMX/USD, we can see that the pair deviated the support at $0.53 into $0.48 and then rallied sharply on serious volume into the 200dMA at $0.80, where it rejected. The pair has since turned daily structure bearish again but is now coming back into that $0.53 support. This should now act as a strong support level following that deviation and high-volume rally; if we close below it, I would expect the rest of the rally to be retraced into $0.48 and losing that would means only the all-time lows are really supporting price down near $0.38. If, however, we find support here and rally back above historical support at $0.64, I am getting back involved in spot. This is definitely a project I want to own for its first bull cycle, and we are starting to see decent structure down here, but I am not looking to jump the gun and buy right here at support. I want to see evidence of a push back above that historical support level first.
Oasis Network:
ROSE/USD
Weekly:
Daily:
ROSE/BTC
Weekly:
Daily:
Price: $0.0408 (147 satoshis)
Market Cap: $205.171mn
Thoughts: Beginning with ROSE/USD, we can see that the pair rejected this past week off the open at prior support around $0.044 and is now set to close near $0.04. Weekly structure remains bearish but volatility continues to diminish also as we hold above that December 2022 low. From here, if we do continue to push through $0.037 support, no doubt we retest that current cyclical bottom. And that is where I want to see a really strong reaction: a deep wick through $0.0335 towards the all-time low but a weekly close back above $0.0335 would be promising; alternatively, continuation of this range between $0.037 and $0.044 would make sense from a cyclical perspective. Any acceptance back above the May 2021 and June 2022 lows at $0.046 would be the first sign that the bottom is well and truly in, in my view.
Now, looking at ROSE/BTC, whilst support has held here sine May 2021, and more recently 148 satoshis has been holding price since June 2023, we are now looking to close below that historical level. Given there is no support between this level and the all-time low at 105 satoshis, things could get dicey in the next week or two. Bulls want to see – much like the Dollar pair – a wick below this massive support level that becomes a deviation, followed by a weekly close through 170 to turn structure bullish. Bears want to see 148 start acting as resistance on the daily – if we see that, I am cutting my spot position and waiting, to be honest. Let’s see how this week unfolds. Squeaky bum time, perhaps…
XCAD Network:
XCAD/USD
Daily:
XCAD/BTC
Daily:
Price: $0.78 (2800 satoshis)
Market Cap: $33.468mn
Thoughts: Finally, both pairs for XCAD are looking almost identical here and so again I will focus on the Dollar pair for clarity.
Looking at XCAD/USD, we can see that price continues to trend lower since that all-time high 660 days ago, most recently forming another lower high below $1.73 in August, from which it has retraced most of the rally back into $0.75, above which it is currently sat. The 360dMA continues to be a problem for the pair, and whilst this trend persists I am not too excited about getting back into a spot position. That said, if we now see price push lower and sweep $0.65 and then rally back above $0.84, that would be my signal for a bottom starting to form, particularly as we approach the previous cycle low and all-time lows. Alternatively, if we don’t see that low swept and instead the pair begins to mark out a tight range here above the low for several weeks, that would also begin to look exciting. Sitting on my hands though for likely another month or two here.
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.
