Market Outlook #36

Market Outlook #36

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Market Outlook #36 (19th May 2019)

Welcome to the 36th Market Outlook. In this week’s post, I’ll be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as usual, plus I’ll be taking a look at Cardano.

Bitcoin:

BTCUSDDaily

BTCUSD1H

Price: $7908

Market Cap: $140.048bn

Thoughts: In last week’s Market Outlook, I mentioned that the lower timeframes were indicative of a short-term top for Bitcoin, and that we may perhaps retest $7500 this past week before making a move back towards the $6800 area. Whilst we did indeed visit $6800, it was only briefly and only after price made new highs at $8400 a few days ago, having held onto the 4H parabola in place.

Looking at the Daily chart provided, we can see that Bitcoin has been capped at a prior level of resistance, forming a far too clean ‘double-top’ scenario. Further, the higher-timeframe parabolic advance is still very much in play, and the flash-crash into the high $6000s was met with a swift reversal and what looks to be a potential bullish continuation. Prior resistance was turned support at $6800 and the trend remains strong. Volume also doesn’t seem to have dropped off yet; as such, there is no indication that $8400 will hold BTC down for much longer…

Looking now at the Hourly chart provided, we can clearly see the current short-term market structure, where the flash crash to $6660 broke the bullish momentum briefly, but the reversal was relatively swift. Resistance turned support at $7600 has been reclaimed and price is lingering beneath local highs above $8k. I have depicted the bearish and bullish scenarios, but given the strength of the trend and the consistency of the volume, I am leaning bullish.

The bearish scenario would see price begin to break down on the lower timeframes, ultimately making a move back towards that pivot at $7600. If this level was lost again, I’d expect price to move back towards $6700. Price is essentially range-bound for now between $6660 and $8400, with $7600 acting as the range equilibrium.

The bullish scenario is a simple one; some consolidation early next week followed by a move above $8400. This is what I expect to see.


Ethereum:

ETH/USD

ETHUSDDaily

ETHUSD4H

ETH/BTC

ETHBTCDaily

Price: $252.24 (0.03206 BTC)

Market Cap: $26.771bn (3,403,218 BTC)

Thoughts: Unlike my thoughts on Bitcoin from last week’s post, my expectations of Ethereum played out near-perfectly, if a little more explosively than anticipated. We saw a sharp reversal for ETH/BTC, and thus a bullish continuation on ETH/USD.

Looking at the Daily chart, we can see how significant the volume is on ETH/USD at present, with volume equalling that of December 2017 on Coinbase. Price also closed above the 360-day moving average, and I have depicted the path to the next area of significant resistance. I doubt we’ll see much of a retrace prior to $350 being hit.

From the 4H ETH/USD chart, we can see the bullish break in market structure when price closed above $250. A pullback and continuation would be the expected course from here.

Finally, the Daily chart for ETH/BTC paints quite a picture. Most significantly, we have likely now found the cyclical bottom for Ethereum at 0.0246 BTC, indicated by the sharp reversal away from that level on heavy volume, in the process of which market structure on the Daily timeframe turned bullish, a level of prior support turned resistance was reclaimed at 0.0305 BTC and the 200-day moving average was reclaimed.

Trendline resistance is the next port-of-call for ETH/BTC, I believe, and a move above 0.035 BTC would herald the beginning of a new bull cycle and the likely breakout above 0.042 BTC in the coming weeks.


Monero:

XMR/BTC

XMRBTCDaily

Price: $86.26 (0.01087 BTC)

Market Cap: $1.465bn (184,719 BTC)

Thoughts: Monero found support at a critical level this past week: 0.01 BTC. Following this, price broke out above trendline resistance, though not as dynamically as the reversals on other altcoins. Range support has become resistance at 0.012 BTC, and price will need to reclaim this level for 0.01 BTC to be confirmed as Monero’s cyclical bottom.


Cardano:

ADA/USD

ADAUSDDaily

ADA/BTC

ADABTCDaily

ADABTC4H

Price: $0.085 (1067 satoshis)

Market Cap: $2.194bn (276,732 BTC)

Thoughts: I don’t think I’ve ever analyed Cardano on the blog, but it’s current price-action presents a great opportunity, in my opinion; in particular because it is one of the few altcoins on BitMex, and a leveraged long on a potential cyclical bottom is an attractive idea. Now, I rarely ever trade on leverage, but there are rare occasions where it makes a lot of sense to do so.

Looking first at the ADA/USD Daily chart, we can see the strength of trendline support and the fact that price bounced off the 200-day moving average recently on solid volume. We can also see the resistance at $0.10.

More important, however, is the ADA/BTC chart, which shows price finding a bottom at 911 satoshis, above the December 2018 low of 834 satoshis. Following this, price bounced hard and broke out above the trendline resistance that has been in play since April. Currently, the 200-day MA is capping price, but, given the bullish market structure on ETH/BTC, I expect ADA will follow suit once ETH begins moving up again.

Looking at the 4H chart, we can see the clean break above trendline resistance, as well as the bullish market structure break above 1058 satoshis on high volume. An entry here with a stop-loss at 900 satoshis and a target of 1950 satoshis (the local high from April) present a 6:1 reward-to-risk opportunity, unleveraged. Add in some low leverage and you have an opportunity for some very high returns.

And that concludes this week’s Market Outlook. I hope you’ve found some value in the read.

Feel free to leave any comments or questions below.


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