Market Outlook #50

Market Outlook #50

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Market Outlook #50 (18th August 2019)

Hello, and welcome to the 50th Market Outlook.

I can’t quite believe it has been 50 straight weeks that I have been publishing these outlooks. I hope you have enjoyed reading them as much as I enjoy writing them.

In today’s post, I will be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as usual, as well as taking a look at ChainLink. Over the next week or so, I may also publish an Altcoin Special as a counterpart to this.

Bitcoin:

Daily:

BTCUSDDaily

4H:

BTCUSD4H

1H:

BTCUSD1H

Price: $10,133

Market Cap: $181.366bn

Thoughts: Over the past week, Bitcoin did almost exactly what I anticipated in last week’s Market Outlook; a rarity with such precision. I mentioned that, due to Bitcoin’s lack of volume and persistent rejection at trendline resistance, I was leaning bearish though not convinced of a direction until we saw price retest and react at ~$11,600.

Early in the week, this is what happened, and price began to break down, which I mentioned would certainly open the door to a retest of $9,100. Whilst we have not yet quite hit those lows, I remain firmly of the belief that the double bottom at that level will be raided before we see more upside. If we look at the Daily chart, we can see that price lost support at $11,180, reclaiming it as resistance and falling swiftly towards $9,500, where it has found a local bottom. The reason why I am now convinced we will move below $9,100, even if only briefly, is because there is clearly not enough liquidity available to push price further up; an idea confirmed by the consecutive lower highs that have been printed. The liquidity for fresh longs and renewed bullish price-action can be found beneath the double bottom, where those currently long will likely have placed their stops and where breakout traders will likely want to enter shorts, expecting price to continue to the downside. That is where both old longs and new shorts get trapped. Whilst price remains below $11,100, I think it is highly likely we see this area raided.

Now, looking at the 4H chart, we can see that price has been forming higher lows since the local bottom was put in around $9500 this past week, but price rejected at support turned resistance at $10,600. For classical pattern traders, this is a bear flag of sorts. I have depicted two scenarios that I believe are possible from here, as long as price remains below that all-important $11,100 level: the most probable of these is for price to break down here, running down swiftly towards (and below) $9800 before reversing; the second scenario is that price breaks upwards above short-term resistance at $10,600, running straight into the $11,100 resistance, where I would like to get short with a target of $9,100, with my invalidation point being a 4H close above $11,500. I am more convinced that we simply break down here without another asymmetric opportunity to get short, however. Either way, I am expecting a move towards $8,900 followed by some kind of reversal; ideally, I’d love to get long on a Daily swing failure at that level, but we’ll come to that later if price gets there. The only thing that would change my mind on whether $9100 will remain intact is if price can convincingly get back above $11,100.

Finally, looking at the 1H chart, we can more clearly see that price formed a swing failure into support turned resistance at ~$10,600, followed by a break in hourly market structure. This is textbook bearish price-action, which is why I am less confident in a return to $11,100 before $9,100 is breached.


Ethereum:

ETH/USD

ETHUSDDaily

ETH/BTC

ETHBTCDaily

Price: $185.02 (0.01825 BTC)

Market Cap: $19.865bn (1,959,630 BTC)

Thoughts: Ethereum continues to give mixed signals, although I expect we are very much near the bottom for both ETH/USD and ETH/BTC.

Looking at the ETH/USD chart, we can see that price rejected at trendline resistance a couple of weeks ago, also forming a swing failure at ~$232 and subsequently losing trendline support from December 2018. This led to further blood, with price losing the 200-day moving average, which had only just crossed above the 360-day moving average. However, we can see that the 360-day is providing support, with price rejecting a close beneath it for several days. Further, we can see that a bullish divergence has been printed here, indicating that perhaps the local bottom is in and we may retest $200 soon. If price fails to get moving here, $160 is the next support. I am patiently awaiting a breakout above trendline resistance on volume, however, before I am convinced the bottom is in.

Looking now at ETH/BTC, price did exactly what was expected in last week’s post, rallying towards 0.02 BTC and rejecting it as old support turned resistance; however, rather than make new lows following this, price seems to be making a double bottom at 0.0175 BTC. I remain cautious about ETH/BTC, but if it can get above trendline resistance and flip 0.02 BTC into reclaimed support, market structure will turn bullish on the Daily timeframe, which has not been the case since May. That is what will signal the reversal, in my opinion. I mentioned on Twitter recently that I expect August will be the month that ETH/BTC puts in its cyclical bottom; perhaps we’ve found it, but let’s be cautious given the 2-month downtrend.


Monero:

XMR/USD

XMRUSDDaily

XMR/BTC

XMRBTCDaily

Price: $81.74 (0.00806 BTC)

Market Cap: $1.402bn (138,422 BTC)

Thoughts: Despite Bitcoin looking rather weak, at least short-term, Monero continues to look bullish against the Dollar, indicating some potential strength and outperformance in XMR/BTC going forward.

Looking at XMR/USD, we can see that price broke out above trendline resistance, having rejected a move below the 360-day moving average. Price made a higher high at $98 above the interim high at $87, rejected and has retested trendline resistance as support this past week, as well as the significant moving averages. Further, price has printed a swing failure into support on the Daily timeframe, indicating higher prices are imminent. I expect we’ll see $98 broken this month.

Looking now at XMR/BTC, price remains range-bound, with the range now lasting 52 days. Given price-action in XMR/USD, I expect we’ll see upwards movement soon. Perhaps a little more consolidation first, and then a test of the range high at 0.0094 BTC. However, unlike previously, where I have been unsure of whether this range is accumulation or further distribution for Monero, given where XMR/USD is sitting, I am now leaning towards accumulation preceding a new bull cycle.


ChainLink:

LINK/USD

LINKUSDDaily

LINK/BTC

LINKBTCDaily

Price: $2.43 (23,935 satoshis)

Market Cap: $852.481mn (84,123 BTC)

Thoughts: ChainLink has been all the rage on CT this year, and I figured I’d take a look at where it currently sits.

Firstly, let’s take a look at LINK/USD: Here, we can see very clean, textbook bullish price-action, with resistance being flipped as new support since April. Having printed its all-time high at $4.85 in June, however, price has fallen off, having been capped by trendline resistance until August. Price then broke out above this resistance and is now consolidating in a range between $2.12 and $2.74. I am waiting for a solid breakout above the range high followed by a retest before an entry.

Looking now at LINK/BTC, we can see similar price-action, with support levels rising, and, most recently, support being found inside the Daily Bullish Orderblock at ~18,090 satoshis. Price reacted violently from this area, forming a V-shaped reversal, but now sits at prior support turned resistance around 24,000 satoshis. Until price makes a clean break and close above the local swing-high at 25,400 satoshis, this could well be a lower high before bearish continuation; as such, I am waiting for a higher high to form on significant volume before buying a pullback.

And that concludes this week’s Market Outlook.

I hope you’ve found some value in the read. Feel free to leave any comments or questions below and I’ll answer them as best I can!


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