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Market Outlook #51 (25th August 2019)
Hello, and welcome to the 51st Market Outlook; and it has certainly been an interesting week, with Bitcoin beginning to shed its dominance and a number of altcoins showing signs of life.
In today’s post, I will be covering Bitcoin and Ethereum, as usual, as well as taking a look at Basic Attention Token and Golem, in place of Monero, which remains in consolidation for now.
Market Cap: $181.011bn
Thoughts: In last week’s Market Outlook, I outlined two probable scenarios for Bitcoin, the first of which was that price would break down and take out the $9,080 double bottom without first retracing; and the second of which was that we would see a move back towards $11,000, enticing more longs, before price came tumbling down.
This latter scenario seems to be playing out, though price fell short of my short target of $11,200, instead topping out at just shy of $11,000. As can be seen from the Daily chart provided, price, having hit that resistance, is now consolidating. Little else has changed since the prior week, with the local low of $9,500 still in place.
Looking now at the 4H chart, we can see that price is respecting levels very well at present, with a short-term range having formed between $9,460 and $10,950. It also appears that a 4H H&S pattern is forming, although these have a habit of failing in Bitcoin, so I would not put much weight on that. Instead, what I am awaiting is a 4H close below $9700, which would bring a swift retest of the range support (and last week’s low) at $9,460, followed by a raid of the double bottom at $9,080. At this point, only a Daily close above $11,000 would make Bitcoin look bullish.
Price: $190.29 (0.01881 BTC)
Market Cap: $20.449bn (2,020,071 BTC)
Thoughts: Ethereum is in a very interesting position at the moment, with ETH/USD lingering above linear trendline support from last year and ETH/BTC consolidating beneath trendline resistance; undoubtedly, some volatility is imminent.
Looking at ETH/USD, we can see that price rejected a move beneath trendline support, with the local low forming at $173; this was followed over the past week with a move up towards prior support at $205, though it held firmly as resistance, maintaining the pattern of support/resistance flips on the way down since the yearly high was printed in June. Until price can reverse this pattern, reclaiming $205 as support, I am not convinced of any sustained reversal; that said, we can see that a bullish divergence has printed on the Daily timeframe, indicating that higher prices may be on their way.
Now, looking at ETH/BTC, we can see that price remains range-bound beneath prior support turned resistance at 0.02 BTC and the local double bottom at 0.0175 BTC, with trendline resistance closing in before month-end. Again, until both trendline resistance and 0.02 BTC are reclaimed as support, I remain unconvinced; however, with Bitcoin dominance appearing dangerously close to a breakdown, my expectations are beginning to lean bullish.
Basic Attention Token:
Price: $0.20 (2014 satoshis)
Market Cap: $260.597mn (25,763 BTC)
Thoughts: Basic Attention Token appears to be on the cusp of cyclical reversal, having looked at both BAT/USD and BAT/BTC charts.
Looking firstly at BAT/USD, we can see from the Weekly chart that price has rejected a move below the historical pivot zone at $0.18 for the second straight week, with a Weekly swing-low appearing to have form. That said, prior swing-lows have been followed by immediate breakdown since April. One other bullish indicator, however, is that volume has been consistently declining as price has retraced since the highs were put in in April at ~$0.50.
Looking now at BAT/BTC, we can see from the Weekly chart that price has recently moved into and rejected from the open price of the first ever bullish orderblock at 1540 satoshis, with the next area of resistance at 2300 satoshis. However, primary resistance is at 3000 satoshis; the prior support zone preceding the breakdown.
From the Daily chart, we can see that price recently broke out above short-term range resistance at 1824 satoshis, closing above it mid-week and retesting the level as support. Price is now in consolidating beneath support turned resistance at 2100 satoshis, with a ~10% move to the upside likely if price can close above this level. Beyond this, I am eyeing up that 3000-satoshi area as a likely target. Also, a bullish divergence can be spotted between the June lows and the August lows.
Price: $0.058 (575 satoshis)
Market Cap: $56.128mn (5,545 BTC)
Thoughts: Finally, Golem is an altcoin that seems rather representative of the majority of midcaps at the moment, with almost all of them appearing somewhat similar.
The first thing to notice is the protracted descending wedge that has been in play since March/April, with price having contracted to all-time lows at ~460 satoshis. This past week, price broke out from the wedge, now consolidating beneath support turned resistance at 575 satoshis. This whole move down has been met with textbook support/resistance flips, with Daily market structure remaining bearish for the entire 4-month period. As such, if we can close above 575 satoshis, Daily market structure will turn bullish and I would expect a test of 740 satoshis. Confluence for this outlook comes from the consistently rising RSI despite the numerous new lows that have been made since May.
And that concludes this week’s Market Outlook. I hope you’ve found some value in this read.
As always, feel free to leave any comments or questions below!
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