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Market Outlook #43 (7th July 2019)
Good morning, and welcome to the 43rd Market Outlook.
It’s been chop city over the past few days in Bitcoin, but we have seen some altcoins begin to show signs of potential cyclical reversals. As such, in today’s post, I’ll be covering Bitcoin and Ethereum, as usual, but will also be taking a look at Waves, Quant Network and Fusion.
Market Cap: $199.444bn
Thoughts: As anticipated in last week’s Market Outlook, this past week saw a bearish continuation that led to Bitcoin dropping off towards prior resistance at $9360; alas, it fell short of the mark, being bought up swiftly a closing the Daily candle green, as can be seen from the first chart provided. This bullish close was followed through with a move up above $12,000 the following day, but the momentum could not be sustained and bulls lost control at this key level.
If we take a look at the 4H chart, we can see that a series of lower-highs and lower-lows has formed, confirming that 4H market structure is indeed bearish until price can break above the high at $12.1k and then $12.5k. Until this occurs, I am expecting further downside, likely towards that $9k level. Volume has also been steadily declining since the turn of the month, indicating that a big move is imminent. Contractions leads to expansion, as I maintain that we’ll see $9k before a bottom is found for this current leg. This would be invalidated, as mentioned earlier, by a move above $12.1k on good volume.
Finally, taking another quick look at the Daily chart, it is clear that a move back towards $9k would also line up with a retest of trendline support that has held firm since late March. If we are bestowed with such a gift, suffice to say I will be filling my boots.
Price: $288.45 (0.02576 BTC)
Market Cap: $30.82bn (2,751,673 BTC)
Thoughts: Whilst ETH/USD’s short-term movements are heavily linked to Bitcoin, I do believe we will see somewhat of a decoupling *if* Bitcoin is to make another leg down and perhaps consolidate below the yearly high of $13,900 for at least a few weeks. This, of course, is the expectation of volatility in ETH/BTC, as we shall come to shortly.
Firstly, let’s take a look at the 4H ETH/USD chart, which depicts the same series of lower highs and lower lows we saw in Bitcoin’s price-action, with a similar period of consolidation at present. If ETH/USD is to follow Bitcoin for another leg down, I expect the $250 will be tested before a bottom is found. However, if ETH/BTC gets some traction on the next Bitcoin dip, there is a chance that ETH/USD either consolidates or breaks upwards, depending on the strength of the movements in ETH/BTC.
As ETH/BTC is the more significant chart for Ethereum’s mid-term outlook, let’s take a look at it on the 4H timeframe. The first thing I’d like to point out is that, despite me suggesting that ETH/BTC *could* outperform the next dip in Bitcoin, it is quite clar that the bounces have been getting weaker from the all-important 0.0246 BTC support, which has now been tested several times. We did see price look strong and break out above trendline resistance when Bitcoin hit $9.6k, but the move could not be sustained and price found resistance at prior support around 0.0281 BTC. When Bitcoin reversed, so did ETH/BTC, falling to a new short-term low but still somehow holding above 0.0246 BTC. I expect that any move above $12,100 in Bitcoin will likely send ETH/BTC to new yearly lows… however, if Bitcoin does make another leg down, I would expect to see ETH/BTC break above 0.0281, turning market structure bullish and likely leading to some significant gains, at least whilst Bitcoin consolidates below yearly highs. This idea is the more likely, in my opinion, given where I believe we are in macro market cycles and the bullish divergences playing out across-the-board at the moment.
I expect next week shall see some volatility for Ethereum, either way.
Price: $2.19 (19,567 satoshis)
Market Cap: $219.088mn (19,567 BTC)
Thoughts: Waves has seen some beautiful market cycles play out throughout its price-history; I expect we are coming to the beginning of another one, having looked at its various charts.
Firstly, the WAVES/USD Daily chart shows that price broke out above year-long trendline resistance in December 2018, rallying to $5 (above the 360-day moving average) but failing to close above it. This local high has remained intact since, with price retracting towards reclaimed support at $1.60, which it found last week. Moreover, there is a clear bullish divergence between the May low and the most recent low, and when we look at where WAVES/BTC is, it makes sense.
From the Weekly WAVES/BTC chart, we can see that price traded into the area of support that formed prior to Waves’ 2017 bull cycle, with the cyclical low having formed at 14k satoshis back then. Price didn’t quite make it that low this time around, and seems to be making a move back towards the support turned resistance at 23k satoshis. If you also glance at RSI here, this is the lowest it has been in Waves’ history.
Now, looking at the 4H chart, we can see a clear market structure break on significant volume, indicating that 15.5k was likely the bottom for Waves. I will be buying dips with a stop at those recent lows.
Price: $11.37 (0.00101 BTC)
Market Cap: $111.158mn (9,924 BTC)
Thoughts: I wrote a 4,000-word Coin Report on Quant Network, covering all of its strong fundamentals, for those who’d like to learn a little about why this particular project has been disregarding all movements in Bitcoin and is currently in the middle of a bull cycle. However, for this post, all we need to know is that Quant is in a very strong uptrend, with prior resistance turning support on every new leg up, as I have illustrated on the 4H chart. Further, trendline support has remained intact since the beginning of June, and, at its current pace, price will be above all-time highs at 166k satoshis in August. This is a perfect trading environment at the moment for those that weren’t able to buy a cyclical position, with clear entries and stops available with each new leg up and subsequent dip. When price begins to break below trendline support on heavy volume, however, there is a high probability that the cyclical top will be in. Play it cautiously.
Price: $1.62 (14,471 satoshis)
Market Cap: $52.108mn (4,652 BTC)
Thoughts: Finally, we come to one of the most beautiful expressions of a classic accumulation range that I have found of late. Fusion has been range-bound between 8k and 20k satoshis for 327 days. That is an insanely long period of accumulation, with the volume spikes and recently rising volume profile suggestive of significant interest at these prices. I am buying below 19k with a soft stop at 8k, with the expectation of holding this one cyclically; I imagine the breakout will be explosive, when it comes.
And that concludes this week’s Market Outlook. I hope you’ve found some value in the read. If there’s anything you’d like answered or cleared up, feel free to drop a comment below!
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