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Market Outlook #42 (30th June 2019)
Hello, hello and welcome to the 42nd Market Outlook. The weeks continue to grow more and more exciting and volatile, and there’s plenty to cover in today’s post. As usual, I’ll be breaking down the past week’s price-action in Bitcoin, Ethereum and Monero, plus taking a look at Komodo and Ardor.
Market Cap: $206.894bn
Thoughts: In last week’s Market Outlook, I anticipated that Bitcoin would take a breather at the $11,500 area, with a number of supporting factors giving weight to this idea; instead, Bitcoin blew straight through that level, moving up into the 61.8% retracement of the entire bear cycle above $13.5k, with a 48-hour period in which the rallies only steepened, giving rise to the idea that a blow-off top was imminent, as I tweeted. To put it bluntly, anyone expecting those latter hours of rallies to continue were either blinded by greed or extremely foolish, as the steepness of the ultimate short-term rallies had us aiming for new all-time highs by the end of this current week.
Now, looking at the first Daily chart provided, we can see that there is an eerily similar fractal of price-action playing out to that from 2015, where Bitcoin signalled its exit from that bear market by rallying hard into a short-term blow-off top at $500. What followed was a pullback into old resistance turned support and a period of consolidation before new highs were made, most significantly allowing for the 200-day moving average to catch up to price, as price had strayed so far from it. As can be seen, the 200MA then supported price for the entirety of the bull cycle. Of course, history never repeats perfectly, and I don’t expect a carbon-copy of historical price-action to play out; however, the blow-off-top-into-consolidation scenario seems the most likely one to me, with a dip to the low $9000s possible.
Looking at the second Daily chart, we can see that price swept above the ‘triple top’ before finding its likely local top for the next few weeks at $13,900. Volume also peaked at its highest since December 2018 and a bearish divergence was printed as price formed this new high. The most recent trendline support remains intact and I expect this is where price will move towards over the coming weeks.
That being said, this is Bitcoin, after all, and all of these notions can be obliterated overnight. As such, the 4H gives us more clarity on the possible scenarios from here. We can see that price is current trading within a short-term range between $12,430 and $11,340; if price closes the 4H below $11,340 on volume, this would break market structure and turn it short-term bearish, indicating that price will likely move to retest the ‘double bottom’ printed at $10,300 and likely move below it. However, if price is able to break above the top of the range, my short-term bearish outlook will be invalidated and I will be once again looking for dips to long into new highs.
Finally, looking at the 1H chart, we can already see that a lower-high has been printed as price has rejected a move above support turned resistance at $12,400 for the second time, but is currently being supported by the 200-hour moving average. I am waiting for the range high or low to be taken out before being convinced of either outlook, but I am expecting a bearish breakout and a move towards $9400 in July.
Price: $302.91 (0.02626 BTC)
Market Cap: $32.436bn (2,815,532 BTC)
Thoughts: ETH/USD continues to hold firmly above its trendline support, even overturning Bitcoin for 24H gains at numerous points over the past week, and having tested $275 as resistance turned support when Bitcoin found its local top. Price found its resistance at $365; an area of prior support now turned resistance. Looking at the steepness of the most recent trendline support, we shall either break out above this level or below in the first week of July…
Looking at the 4H chart for ETH/USD, there is something quite interesting occurring; where Bitcoin printed a lower-high within its short-term range, Ethereum has printed a higher-high. Nonetheless, I am waiting on a clean break above or below short-term range resistance or support to determine the outlook for ETH/USD. A move below $290 would likely open up new-found support at $275 for a retest, with a possibility of a dip to $250 before a bottom is found; conversely, a new higher-high would indicate underlying strength in Ethereum and open up the possibility for new highs rather quickly, likely fuelled by a bounce in ETH/BTC.
Now, looking at the Daily chart for ETH/BTC, one of the most interesting things here is yesterday’s candle close, where the body entirely engulfed the body of the previous candle; though not strictly a bullish engulfing, this is promising for Ethereum bulls, as it indicates a lack of willingness to move below that oh-so-critical 0.0246 BTC support, which has withheld numerous tests thus far. That being said, I would not rule out a brief dip below, acting as a spring from which ETH/BTC would reverse sharply.
On the 4H chart, we can see a bullish divergence on the recent dip, mimicking that of the dip in mancid-May, which led to an explosive rally. Trendline resistance continue to cap price, however, and until price can close above 0.028 BTC, I am not confident that the bottom is in.
Price: $96 (0.00834 BTC)
Market Cap: $1.638bn (141,796 BTC)
Thoughts: What a turn of events this past week brought to Monero. I did say that holding that local low at 0.01 BTC was absolutely vital for it and that until it reclaimed 0.0116 BTC, it was unattractive. Bitcoin’s sharp rallies destroyed local support for Monero, as can be seen on the charts provided, with the Weekly chart showing that price has now come into an area of historical turned support at ~80k satoshis, thus perhaps this past week was Monero’s final capitulation. However, looking at the Daily, it is quite clear that below 0.01 BTC it is not a buy.
Price: $1.30 (11250 satoshis)
Market Cap: $149.756mn (12,920 BTC)
Thoughts: Komodo looks exceptionally bullish against the Dollar, as altcoins go, with the Daily KMD/USD chart depicting a successful retst of the 360-day moving average this past week, along with a deep bullish divergence in RSI. Reclaimed support at $0.90 held firm as price rejected a move above support turned resistance at $1.70, and I expect we’ll see some bullish continuation against the Dollar in July.
Looking at the Daily chart for KMD/BTC, we can see that the past week saw local support lost below 14k satoshis and a brutal dump below 9k satoshis, from which price is now looking like it is reversing. The whole period from June 2018 looks to me like an extended Wyckoff accumulation cycle, with this most recent dump looking like the final spring. When we drop down into the 4H timeframe, this looks ever more likely as price has broken bearish market structure as is beginning to turn resistance into support; all we need to confirm this thesis is a higher timeframe close above that lost support at 14k satoshis.
Price: $0.116 (985satoshis)
Market Cap: $115.893mn (10,003 BTC)
Thoughts: Looking at altcoins over the past week, few showed such strength and resilience to Bitcoin’s rallies as Ardor, which only barely budged below its mid-May lows for ARDR/BTC.
Looking at ARDR/USD to begin with, we can see a very similar fractal playing out to that of November 2016-March 2017, with Ardor respecting levels of prior resistance as new support. Further, there is an ascending triangle forming that looks to be culminating sometime in Q3, from which I expect a strong upside breakout.
Now, looking at the first Daily chart provided for ARDR/BTC, we can see another pattern playing out that has preceded both of the previous bull cycles for this coin; a period of consolidation and a ‘test pump’ that led to a double bottom. Volume on buy-ups has been impressive and I expect we shall see upwards momentum soon. In fact, the bullish divergence depicted on the second Daily chart confirms this; the sheer resilience of Ardor in June has indicated to me that it will likely be an outperformer in the next cycle.
And that concludes this week’s Market Outlook. I hope you’ve found some value in the read!
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