Market Outlook #242 (23rd October 2023)
Hello, and welcome to the 242nd instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Solana, dYdX, Blur, Audius, Sushi and Automata. A couple of these have been reader requests this week – and as ever, if you have any requests for next week’s Outlook, do let me know.
Market Cap: $599.191bn
Thoughts: If we begin by looking at BTC/USD on the weekly timeframe, we can see that last week saw a huge rally off key support, with the pair climbing out of the weekly open through the 200wMA and multiple levels of resistance beyond, closing the week out at $30.6k. In doing so, we have confirmed a higher-low above that trendline and the summer bottom, and momentum on the weekly is very much still pointing towards higher prices. We now have very little overhead resistance into fresh yearly highs, with $32.9k the real magnet now. Looking below, as long as price can now hold $28.4k as resistance turned support on any pull-backs I think it’s safe to say the longer-term trend has resumed upwards. Obviously, if we close the weekly back below that, we can talk about downside targets.
Turning to the daily, we can see how there is no momentum exhaustion here even after multiple days of rallying but price is sat right below resistance that has capped the pair all of 2023: $31k. I would not be looking to add long exposure up here; rather, await either a clean breakout and extension into $33k, then buy a pull-back with a view to hold for a gap fill into $39.6k, or if price rejects in this area look to buy closer to $29.4k if that level is retested. Chances are – if this really is the resumption of a long-term uptrend – pull-backs will be shallower than expected or we’ll get some sort of bear trap formation before continuation higher (deviation of yearly highs -> break back inside -> everyone piles into shorts -> breakout again with rocket fuel for $40k). Given how desperate the pair looked as it retested support the week before last, the response has been huge and no doubt we now have narratives for the rally to cling to into 2024.
Price: $1,680 (0.05481 BTC)
Market Cap: $202.381bn
Thoughts: Beginning with ETH/USD, we can see from the weekly that price formed some bullish divergence on the most recent push into support at $1508, and whilst it has left that level painfully clean, we have pushed higher into the 200wMA at $1698, below which price is currently sat. As I say, it is painful for bulls that there is such a clean level untaken below price, but for now ETH is climbing with BTC, albeit lagging. We are right at significant resistance here, so if BTC takes a short dive, no doubt we move lower off this area for ETH/USD too – and maybe that next push lower will be the final one from which the pair can grab some $1500 liquidity and then reverse sharply. If, however, we are to leave those lows untaken, a weekly close through $1755 will be the first key signal, as weekly structure will turn bullish once again and I would be leaning more towards a breakout beyond 2023 trendline resistance than further downside at that point. If we see something like that, momentum will also start to push in favour of bulls on the weekly. Turning to the daily, we can see how price did very minorly sweep that support into $1508 but I wouldn’t be convinced of that as a spring, if a spring is what we need here. The pair is now pushing right up into a cluster of resistance and at the very least I would expect to see $1616 retested here early this week as support. If that holds, onwards and upwards into $1755.
Turning to ETH/BTC, we continue to fall but have now fallen right into that huge confluence of support, with the multi-year range lows and the 200wMA meeting at 0.055. We wicked below that last week into 0.0533 but bounced to close above it – if ever there was an area to expect the tide to turn in favour of ETH outperformance, it would be within the next 5% range lower and over the next week or two. If we close the weekly below 0.0533, this support has failed and then we likely fill in the wick into 0.0487 before finding more support. If it holds, I think this marks out the bottom for ETH/BTC. No sign of exhaustion yet on the weekly, however. Dropping into the daily, again we have no sign of exhaustion here, but what would be really nice is a move below last week’s low right into 0.0533, with bullish divergence forming later this week and price closing the week back above 0.055 again. That would look like a reason to flip short-term bias at least, with a retest of the long-term trendline resistance likely from there over the coming weeks and months.
Price: $30.21 (98,621 satoshis)
Market Cap: $12.557bn
Thoughts: If we begin by looking at SOL/USD, we can see that price formed a higher-low and is continuing its trend higher since the May-June bottom earlier this year. Last week saw price rally off the open through $25.76 – a key level, right into $30, as anticipated, where price is now consolidating. Weekly RSI is pointing towards higher prices, firmly trending higher and pushing into bull territory, but price is now at the level that has capped price all year. Close the weekly above this and I think we are on for much higher prices into 2024, with that $48-54 range a target. If we drop into the daily, again much like BTC we can see no signs of exhaustion here for momentum but price is finding the $30 area difficult on this attempt. If we pull-back into $26, that is a solid long opportunity, in my view – with invalidation below the 200dMA around $21.
Turning to SOL/BTC, we can see that the pair broke and closed above multi-year trendline resistance, retested it as support then rallied last week off it, confirming the breakout as valid and turning weekly structure bullish once again. Though we are now sat perilously close to a cluster of resistance, there is no doubt that the tide has turned longer-term in favour of SOL outperformance – this very much looks like the beginning of a new market cycle for the pair. Dropping into the daily, we can see how 0.001 is acting as reclaimed resistance here and price will likely look for 87k satoshis as prior resistance turned support on any pull-back; hold above that and I think we clear the yearly highs around 0.00113 and make good on the gap into that 0.0016 area.
Price: $2.10 (6865 satoshis)
Market Cap: $372.279mn
Thoughts: If we begin by looking at DYDX/USD on the weekly timeframe, we can see that price has been consolidating in a tight range above $1.77 and below $2.40 for the past few months, with trendline resistance from the beginning of the year now pushing down on price. Momentum is flat, as one might expect, but it would be very strange to expect significant downside from here when we look at what the broader market is doing. Rather, I expect we will see price break and close beyond the trendline and through $2.40 over the coming weeks, emerging finally from this consolidation range, and continuing higher into major resistance just below $3, which has been the most important level of resistance since the May 2022 capitulation. Close the weekly through that and we are on our way to disbelief. Dropping into the daily, the 200dMA is acting as resistance here and if we do pull-back off this level no doubt we simply retest $1.92 as support before taking another stab at the trendline in early November; unless we now close below $1.77, I am leaning bullish for the coming months.
Turning to DYDX/BTC, we can see how price is still hovering above reclaimed support at 6400 satoshis, around the area that marked out the bottom in June. Whilst this 6100-6400 range holds, I think it is likely we continue to consolidate here until BTC/USD slows down its pace, and then the pair marks out a higher-low above that June low and makes another ascent towards 11k satoshis. Looking at the daily, we can see how price broke above the 2023 trendline but failed at the 200dMA, now capping price with another minor trendline, which price is currently pushing up into. I would be surprised to see the pair break this confluence of resistance at 7.1k satoshis whilst BTC is rallying through major levels, but I would expect to see either divergence form on the next push lower or a higher-low form in early November, from which the pair can push off through 7k towards 8.8k and beyond.
Price: $0.188 (615 satoshis)
Market Cap: $191.723mn
Thoughts: As Blur has only been trading for a short period, both pairs look identical and I will focus here on BLUR/USD.
We can see from BLUR/USD that price has been in a downtrend since inception, bleeding for 246 days and retracing 89% from the all-time high until it form an all-time low at $0.15 in August. Price then bounced sharply into $0.24 but failed to sustain the move, bleeding once again but with diminishing volatility, as it approached the all-time low once again earlier this month, swept the level and then rallied higher. Price broke through trendline resistance that has capped the pair its entire existence and is now consolidating above $0.18. It is now key that the $0.16-0.18 range gets protected as reclaimed support following this sweep of the all-time low and subsequent trendline break. If we see a higher-low form in this area, and price close above $0.20, I think the bottom is in and we can look for spot exposure with $0.15 as invalidation and $0.29 as the local target. Above that, it is clear skies towards $0.40 and beyond, with Blur having never experienced a bull cycle…
Price: $0.15 (479 satoshis)
Market Cap: $164.581mn
Thoughts: Beginning with AUDIO/USD, we can see that the pair has been in a bear market for almost 3 years, having drawn down 98% from its all-time high back in March 2021 but held above support at $0.12 since December 2022. This level continues to act as support here, with price having formed a very tight range with flat momentum, and I would expect to see either a sweep of the level that acts as a spring or a few more weeks of consolidation before price pushes higher. If we see a weekly close above $0.20, I think the cyclical bottom is in, and spot exposure looks great with that clean invalidation level at $0.12, with a view to add on acceptance above $0.30. Below $0.12, there is no support back into the all-time lows, so I would look to immediately exit in that scenario. This is a textbook long-term altcoin cycle, and it is likely we emerge from this sometime in 2024 into the next bull phase. Briefly looking at the daily, we can also see how this coiling up is forming bullish divergence here, which is promising. Hold $0.12, bulls.
Turning to AUDIO/BTC, we have again been in a bear market since early 2021 and lost 95% of value from there, but price has also lost support at 577 satoshis recently and remains in a downtrend, pushing below that level into 460, around which it now sits. This is no man’s land between support above the all-time low at 418 from January 2021 – the level from which price sharply turned and began a bull cycle. I would expect this all-time low to get taken out and price to reverse off a reclaim of it as support later this year, particularly if BTC continues to rip…
Price: $0.578 (1888 satoshis)
Market Cap: $111.209mn
Thoughts: Looking at SUSHI/USD, we can see from the weekly that the pair lost its year-long support at $0.90 in May and capitulated into the all-time low at $0.46, above which it just about held on, bouncing and forming a range below $0.75 and above $0.53 as support. Obviously, momentum is flat here and the range has been very tight for a couple of months, and whilst this is just consolidating with bearish weekly structure above the all-time low it doesn’t look super attractive relative to other midcaps. Rather, I would like to see the $0.46 level swept, or price to close back above $0.90 before getting involved. Reclaim $0.90 as support and that is a very strong signal in my opinion for the bottom having formed, and there is an easy double off that reclaim into $1.95.
Turning to SUSHI/BTC, the pair has been trendline lower for 889 days and is set to form a fresh all-time low below 1831 satoshis this week, but importantly it looks like the trend is exhausting as we push lower here. If we can form bullish weekly divergence and then reclaim 1831 as support, that’s a good start: but, I want to see the November 2020 low that marked the prior cycle low reclaimed as support at 3181 satoshis; accept above that and clear out the trendline that has capped price since the 2021 highs and I think we have the beginnings of a longer-term reversal…
Price: $0.077 (253 satoshis)
Market Cap: $33.605mn
Thoughts: Beginning with ATA/USD, we can see that price has been trending lower for 791 days, almost since inception, and has lost 97% of its value from that high in August 2021. More recently, the pair broke below the Nov-Dec 2022 support at $0.09, turning it into resistance and formed and fresh all-time low in August at $0.056. Price bounced off that support and has been consolidating above it and below $0.091 ever since. Momentum does look like it is beginning to tick higher, but I want to see that weekly close on good volume above $0.09 to get excited about this again – and I would love to start allocating spot above that level with $0.055 as invalidation and a view to add on acceptance above $0.12. We have very little resistance between there and $0.22, so I expect that range to get filled quickly, but then we have another huge gap up into historical support turned resistance at $0.31. Plenty of upside here for 2024 if the broader market continues to play ball.
Turning to ATA/BTC, much like SUSHI, the pair is still very much in a downtrend and capped by trendline resistance, and it would not surprise me to see fresh all-time lows here below 220 satoshis. But, what would be great to see is some trend exhaustion coming into play if we continue to push lower, with a weekly close above 340 satoshis then turning structure bullish and obviously clearing out that trendline; that would be a really high conviction scenario to look for long exposure in my view, with a 6 to 12-month time horizon on that play. ATA has never experienced a full bull cycle either, and so I would expect to see some significant upside if the tide is truly turning in favour of bulls for crypto after almost three years of bear market and consolidation.
And that concludes this week’s Market Outlook.
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