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Market Outlook #41 (23rd June 2019)
Hello, and welcome to the 41st Market Outlook. This has been a roller-coaster ride of a week and there’s a lot to unpack, particularly amongst the large-caps. As such, I’ll be looking at NEO and Litecoin today, in addition to Bitcoin, Ethereum and Monero.
Let’s crack on:
Market Cap: $188.258bn
Thoughts: As anticipated in last week’s Market Outlook, Bitcoin followed through on its momentum and moved towards the expected historical, technical and psychological resistance of ~$10,000; and, in true Bitcoin fashion, it blew straight through that level, rising all the way to $11,200.
On the Weekly chart provided, I have depicted the parabolic advance, which continues to grow steeper, as well as the historical resistance at ~$11,600. The prior two historical resistance levels have turned support as Bitcoin has climbed, and $10,000 seemed as insignificant as $6,000 did. However, $11,700 is the 50% retracement of the entire bear market and thus a likely place for Bitcoin to finally take a breather.
Looking at the Daily chart, we can see that there are some signs of the steam running out short-term, with a bearish divergence on the RSI, as well as a decrease in the volume traded relative to the previous peak in the $8,000s. If we are to get a pullback below $11,600, I expect it will take us back towards $10,000, though perhaps even below this, towards the prior resistance at ~$9k.
Finally, on the 4H chart, we can see the beautiful uptrend that price has been in for many weeks now, with the 200MA acting as solid support. Further, trendline resistance turned support on the break above $6,400, and perhaps this is something we can expect of the trendline resistance that gave way a little below $10k. If this turns to support, we can expect the next local bottom to be above $10k. However, if it falls, I would think we’d see price fall back towards the 200MA, which has provided such strong support of late.
Price: $306.86 (0.029 BTC)
Market Cap: $32.731bn (3,092,206 BTC)
Thoughts: Ethereum continues its ascent against the Dollar, being pulled up by Bitcoin’s rally. However, the more interesting price-action is occurring on the ETH/BTC chart, which we shall cover shortly.
Firstly, the Weekly ETH/USD chart mimics BTC/USD, though lagging due to the underperformance of ETH/BTC. Nonetheless, the parabolic advance is very much intact and Ethereum is rallying towards historical resistance at $350 (though, given Bitcoin’s disregard of such levels, perhaps it won’t act as one).
The Daily chart paints a mixed picture, with a bearish divergence much like Bitcoin’s in play. More importantly, I am watching the volume, as the current breakout from a period of declining volume is barely significant, relative to the volume traded on the move to $270. Given such high volume traded around that level, and it being reclaimed support, I would expect it to hold moving forward.
Now, looking at the ETH/BTC Daily chart, we can see that trendline resistance from January 2018 has turned support on the past week’s leg down, with lots of volume coming in as a low was found. The 200-day moving average continues to cap price and is one of the levels I’m using as an indicator as to when a new leg up might begin for ETH/BTC. Price also remains below the pivot of 0.03 BTC, which is the equilibrium of the range between 0.024 BTC and 0.4 BTC.
The 4H provides a little more clarity, with key support at 0.0278 BTC. Market structure remains bearish short-term, despite the recent bounces, but a move back above 0.03 BTC would flip this outlook to bullish, and, given the bullish divergence, I expect this will be the case. If, however, Bitcoin continues its ascent and moves above $11,600 with no breather, this support will most certainly fall and ETH/BTC will make another test of the 0.0246 BTC support.
Price: $114.06 (0.01078 BTC)
Market Cap: $1.945bn (184,003 BTC)
Thoughts: Monero, much like Ethereum, continued its ascent against the Dollar due to BTC/USD pulling it up this past week.
Looking at the Weekly XMR/USD chart, we can see that volume has been rising in general for the past few months and that RSI is printing higher-highs, suggesting the trend is healthy. Further, like all the largecap/Dollar pairings, it is mimicking Bitcoin’s parabolic advance and is sitting right below historical resistance at $130, with more resistance at $160.
The Daily chart, unlike for Bitcoin and Ethereum, is not painting a bearish divergence, which is very interesting and perhaps an indication of the underlying strength of XMR/BTC. We can see that the 360-day moving average was successfully tested recently, with price bouncing hard to new highs at the 1.618 extension of the prior swing: $120. I have highlighted where I expect price to seek next, which is around $150, likely in July.
Now, looking at the Daily chart for XMR/BTC, what pops out immediately is that Monero traded its highest ever daily volume on Binance this past week, indicating a great deal of accumulation at these prices. Nonetheless, price remains range-bound and I continue to watch that 0.0116-0.012 area for signs of a reversal.
Price: $140.63 (0.0131 BTC)
Market Cap: $8.768bn (820,190 BTC)
Thoughts: Litecoin has led the market reversals since late 2018, with a strong, unbroken uptrend visible on the Weekly LTC/USD chart. We can also see that volume has remained both significant and consistent on the rally and that price has reclaimed a very significant prior support level at $100. I have depicted the path I expect Litecoin to take over the coming months, with all-time highs in sight against the Dollar by the end of the year.
Looking at the Daily chart for LTC/USD, one very interesting thing occurred this past week; the 200-day moving average crossed above the 360-day moving average for the first time since the bear market began. With Litecoin leading the charge for altcoins, perhaps this is a sign of what to expect for other majors moving forward.
On the LTC/BTC Daily chart, we can see the hidden bullish divergence that formed on yesterday dump into prior resistance turned support at 0.0126 BTC. Further, the 200MA remains above the 360MA and continues to support price; until this gives way, I expect LTC/BTC to get another leg up. The most critical evel of support for this bull cycle, however, is at 0.011 BTC; if this falls, its likely game over for Litecoin until the next market cycle.
Price: $17.45 (0.00163 BTC)
Market Cap: $1.23bn (115,155 BTC)
Thoughts: Now, NEO grabbed everyone’s attention yesterday because it got bought up en masse on Binance, printing its highest ever volume traded in a single day, perhaps signalling its cyclical bottom.
Looking at the NEO/USD Weekly chart, we can see that price has broken above resistance this past week, with a Weekly close around here confirming a cyclical reversal. Signficantly, there doesn’t appear to be a great deal of resistance moving forwards until around $26, and beyond that until $47.
The Daily chart for NEO/USD shows that price closed above the 360-day moving average yesterday, thus longing any pullback to ~$15 is likely a wise move. That volume is absolutely insane, too.
However, against BTC, there is still work to be done, as the 200MA continues to cap price. I am looking for a Daily close above 0.0017 BTC before a cyclical reversal is confirmed. If this happens, I am very bullish on NEO moving forward.
And that concludes this week’s Market Outlook. I hope you’ve enjoyed the read! Feel free to leave any comments or questions below.
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