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Market Outlook #46 (21st July 2019)
Hello, and welcome to the 46th Market Outlook.
A lot has happened over the course of the past week, with volatility across-the-board; and, more significantly, a great deal of chop. Many have been chopped up by recent price-action, so I believe it will be helpful to take a look at some higher time-frames in today’s post.
I’ll be covering Bitcoin, Ethereum and Monero, as usual, plus taking a look at Litecoin and Golem.
Market Cap: $190.921bn
Thoughts: As anticipated in last week’s Market Outlook, Bitcoin broke through its support and made fresh new lows below $9500 this past week.
Looking at the Weekly chart, we can see that volume has been steadily rising throughout this entire rally since January, and that the trendline support from back then remains intact, despite the recent dumping. I have highlighted a similar pattern of price-action that occurred in Q4 2015, on the initially rally after Bitcoin broke out of that previous bear market, with highs set at $500 for several months. Whilst I do not expect price to play out an identical pattern this cycle, I do expect we will see some consolidation below yearly highs at $13,900 for several weeks.
Looking now at the first Daily chart, we can see a large bull flag that has been unfolding since the yearly high formed, with this most recent move down making new lows but holding firm at prior resistance turned support (~$9100). I tweeted in June that I expected $8,800-$9,200 to be the range in which the bottom for this current leg was found; now that we’ve hit those levels and reacted well from them, I’m waiting to see if bearish market structure can be flipped to confirm my idea. Interestingly, we also witnessed the 200-day moving average cross above the 360-day moving average for the first time since November 2015 (when that similar pattern of price-action I pointed out on the Weekly first played out).
Now, let’s take a look at the second Daily chart, which more clearly depicts recent price-action. We can see that the bull flag has set trendline resistance and support in place, and that, when price closed below $10,700, bullish market structure turned bearish, with price retesting the fallen support as resistance and making new lows the following day at $9,080. This is also where range resistance turned support in early June. However, whilst the reaction from this level has seemed strong, with price climbing back to the $10,700 pivot, this move has occurred on declining volume, at least on Coinbase, indicating potential exhaustion of buyers at this key resistance. If price began to break down here on the 4H time-frame (which I’ll cover next), I would expect that $9,080 low to be retested. However, if price can reclaim this all-important pivot zone, closing the Daily above $11,000 on good volume, I will be convinced that we’ve found the bottom for this leg.
Finally, looking at the 4H, I have depicted the two traditional head-and-shoulders patterns that have been painted; the first was bearish, and one that I pointed out last week, which broke down and led to lower prices. However, following the completion of this first pattern, a second, inverted pattern has formed. The neckline remains the all-important $10,700-$11,000 area. If price begins to close above this area on good volume, I expect we shall retest $12,700 over the coming weeks. If price breaks down and closes the 4H below $10,000, I expect we see $9,100 retested.
Price: $227.63 (0.02135 BTC)
Market Cap: $24.422bn (2,282,664 BTC)
Thoughts: Ethereum was mangled from both sides this past week, leading to serious capitulation on ETH/USD.
Looking at the Weekly chart for ETH/USD, we can see that despite prices hitting $190 (from $266 in last week’s post – I expected $225), trendline support from November 2018 remains intact, and there is a chance that prior support turned resistance has been reclaimed as support. The Weekly candle itself looks very bullish at the moment, with greater volume than the previous week. However, I’d like to see tonight’s Weekly close above $230 to indicate that this was a mega bear trap. Resistance remains the old support at $370, with current trendline support looking to carry prices towards that level again by November.
Looking at the Daily chart for ETH/USD, we can see that the 200-day and 360-day moving averages provided confluence for the horizontal support at the $190 level. However, the $230 prior support is now acting as resistance, and price needs to close above this to avoid a retest of trendline support and the moving averages; a breakdown from which could get very ugly, very fast.
Now, turning to the 4H chart for ETH/BTC, the respecting of prior support levels as new resistance becomes clear, with bearish market structure holding. Until price can flip 0.023 BTC, and, more importantly, 0.0245 BTC, outlook remains bearish. That said, given where ETH/USD is, and where altcoins are in their macro market cycles, I don’t expect there to be much more downside for ETH/BTC at all, if new lows are to come. The more likely scenario is that we start seeing market structure flip bullish from these levels, in my opinion.
Price: $85.21 (0.00795 BTC)
Market Cap: $1.457bn (136,080 BTC)
Thoughts: Monero had a steady week relative to Bitcoin, with only its Dollar-pairing experiencing any volatility due to this.
Looking at XMR/USD, we can see that Bitcoin’s bearish movement led to Monero testing its 360-day moving average and trendline support from February. Price broke down below short-term trendline support, which is now acting as resistance. If price fails to reclaim this level as support, I expect we’ll see new lows, though this is likely driven by Bitcoin’s interaction with its own significant pivot zone.
Looking at XMR/BTC, we can see that price has formed a new range since the end of June, with the range low at 0.0073 BTC and range high at 0.0094 BTC. Until we see price move above the range high on volume, I am not buying Monero.
Price: $99.18 (0.00936 BTC)
Market Cap: $6.224bn (587,798 BTC)
Thoughts: Litecoin is in a very interesting position right now, as its block reward halvening is only two weeks away.
Looking at the LTC/USD Daily chart, we can see that price closed below the trendline support form December briefly, but price rejected remaining below that level, closing back above trendline support two days later. This is rather bullish. However, having broken down from support at $108, this level is now acting as resistance, with Litecoin consolidating beneath it. with short-term trendline resistance also looming. I’d like to see both of these resistance areas overcome and then start looking for longs to take out the yearly highs at $148.
Looking at LTC/BTC, price recently broke out above trendline resistance from June 10th on solid volume, reclaiming resistance as support at 0.00915 BTC. Price is now in consolidation beneath support turned resistance at 0.01 BTC. I expect we shall see higher prices from here now that 4H market structure has turned bullish. If price begins to close below 0.00915 BTC, however, bullish market structure will be lost and I would expect to see 0.008 BTC retested.
Price: $0.07 (659 satoshis)
Market Cap: $67.784mn (6,326 BTC)
Thoughts: Golem looks rather decent at the moment, amongst the sea of shit.
Looking at GNT/USD, we can see that price has been range-bound between $0.05 and $0.12 for 235 days, with it forming a potential triple bottom at range support this past week. Thus, it is likely that this is Golem’s accumulation range against the Dollar. Risk-averse traders would want to wait for a move above this range before entering a position.
Now, looking at GNT/BTC, we can see that new lows were made this past week, but price is beginning to break upwards, having found support at 550 satoshis. I have bought a little at these lows, but what I am waiting for before adding to my position is a break above support turned resistance at 900 satoshis coupled with a break above trendline resistance from March. This on solid volume would mark a cyclical bottom for me, and I’d add on the retest of 900 satoshis.
And that concludes this week’s Market Outlook.
As ever, if you have any questions, feel free to leave them below.