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Market Outlook #47 (29th July 2019)
Hello, and welcome to the 47th Market Outlook.
Apologies for the delay on this post; I’ve been away for the weekend and didn’t get any time to write it up yesterday.
That said, we’ve had a week of chop across many of the majors and consolidation in much of the rest of the market.
In today’s post, I’ll be covering said chop in Bitcoin, Ethereum and Monero, as usual, plus providing an update on Litecoin prior to the block reward halving at the end of this week (which, I should add, I expect to be a non-event) and taking a look at BitTube.
Let’s crack on:
Market Cap: $170.982bn
Thoughts: In last week’s Market Outlook, I highlighted the fact that volume was declining as price traded at support turned resistance around $11,000, indicating exhaustion from buyers. I expected to see a retest of $9,100 if price broke down on the 4H from this point.
Looking at the Daily chart provided, we can see that volume has continued to decline for the entirety of the past week, with price failing to close above the $11,000 level and reclaim it as support. Had price have been able to get above this level on solid volume, I’d have been convinced that the $9,080 low was the low for this leg; as soon as price began to reject there, a retest of the lows was inevitable, but not before some major chop and stop hunting…
To provide some context, I have depicted the market structure break that occurred two weeks ago; this past week, we retested the level at which Daily market structure became bearish. On this time-frame, one could be forgiven for seeing a clean retest > rejection > bearish continuation, but it’s on the 4H chart that we can see just how choppy price-action was.
Looking at the 4H chart, the most important thing to note is that, the week prior, liquidity was engineered for fresh shorts to enter the market above $11,100, as early shorts were taken out. From this point, price rejected heavily, with market structure on the 4H once again turning bearish as price closed below $10,300. This effectively mirrored the breakdown from $11,000. Price continued to decline, turning short-term support levels into new resistance, with a clear downtrend in play for the week. However, a couple of days ago, price once again engineered liquidity for fresh shorts by running up above this $10,300 level, where all the late shorts will have placed their stops. As depicted on the chart, this stop run was met with another violent breakdown and fresh new lows beneath $9,550, leading to a retest of the $9,080 swing-low yesterday and another break in market structure; that’s several changes in 4H market structure across the past week, despite clear directional bias on the higher time-frames.
The most interesting thing from yesterday is that price held above the $9,080 low, with last night’s low coming in at $9,120. Given what we have seen recently with liquidity being engineered for fresh shorts, perhaps this will invite the inverse; the double bottom will invite longs that expect higher prices, as price rejected a move below $9,080; thus, long liquidity now likely exists beneath these lows and I would be very surprised if this area is not raided this week. As such, I will be looking to short whilst these lows remain in place, with a target of $9,000 and below.
Price: $212.59 (0.022o9 BTC)
Market Cap: $22.767bn (2,366,313 BTC)
Thoughts: Ethereum is in a very interesting place right now, with the 200-day and 360-day moving averages supporting ETH/USD for the time being, as can be seen on the first chart. Support turned resistance at $230 is still the key level that I am watching before I start looking for longs; until this level is flipped on solid volume, market structure is bearish on the Daily time-frame. However, not only is there significant moving average support at $190-200, but there is also a level of prior resistance turned support; as such, I would not be surprised to see ETH/USD bottom out here and begin re-accumulation for its next leg up.
Now, looking at ETH/BTC, volume is currently flat as price consolidates below support turned resistance at 0.023 BTC. Trendline resistance is also looming, and contraction always leads to expansion; I expect we’ll see some volatility in Ethereum this coming week. I would like to see the 0.023 BTC level flipped as reclaimed support before being convinced a cyclical bottom is in for the pair, and such a move would likely also drag ETH/USD up above resistance also, at which point I could start looking for longs again.
Price: $79.98 (0.00833 BTC)
Market Cap: $1.369bn (142,390 BTC)
Thoughts: Monero is having another period of low volatility, as it consolidates beneath support turned resistance at $86 and remains range-bound between 0.0073 and 0.0094 BTC. Regarding the latter pair, Monero has been trading in this range for over a month now, and is slowly drifting upwards towards the range high. Nonetheless, until this range high is taken out on solid volume, I will continue to remain flat; as soon as I see buyers step in and market structure turn bullish on the Daily time-frame, I will enter a new position.
Price: $90.61 (0.00942 BTC)
Market Cap: $5.696bn (592,257 BTC)
Thoughts: Litecoin is inching closer to the block reward halving, with it expected to take place at the end of this week. That said, I expect the event itself to be insignificant with regards to price-action; instead, I am expecting an opportune long setup to occur for the period after the event, as it is usually post-halving that the second leg of a macro bull cycle has begun.
Looking at the LTC/USD chart, we can see that price remains capped by trendline resistance from the peak at $150, and, more importantly, is in consolidation beneath support turned resistance at $102. The 200-day moving average provided support for price a couple of weeks ago, and the low of $78 remains in place. I will not be looking for longs until both trendline resistance and the $102 level have been flipped as support, confirming $78 as the low for this leg.
Looking at LTC/BTC, I have depicted what I am hoping to get long on; a 4H close above 0.01 BTC on good volume, with a pullback to resistance turned support. I’d be targetting 0.0109 BTC short-term, but would expect to see higher prices over the coming weeks if Litecoin can get above these key resistance areas on both its Dollar and Bitcoin pairings.
Price: $0.027 (282 satoshis)
Market Cap: $3.972mn (413 BTC)
Thoughts: BitTube is a fascinating project, and one of many fundamentally-sound ones that have been burdened by inflation. That said, it does appear that a bottom may be in for TUBE, with market structure turning bullish on the 4H chart when the 275-satoshi level was flipped. Since then, price has traded up into resistance at 370 satoshis and rejected the first and second attempts, now trading at ~280 satoshis.
I have entered a position here with a stop-loss at 230 satoshis and an initial target of 370 satoshis and a second target of 525 satoshis.
That concludes this week’s Market Outlook. I hope you’ve found some value in the read. As ever, feel free to leave any comments or questions below!
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