Market Outlook #54

Market Outlook #54

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Market Outlook #54 (15th September 2019)

Whilst the past week has presented little movement of note in Bitcoin, with the weekly range safely inside the previous week, large-cap altcoin have begun to show the signs of life expected of them at this stage of the market cycle; particularly concerning our thesis on EOS/ETH moving forward into Q4, but more on this later.

In this week’s Market Outlook, I shall be looking specifically at the Daily time-frame across Bitcoin, Ethereum and Monero, as usual, as well as EOS due to its significance as a sentiment gauge for the altcoin market.

Let’s crack on.

Bitcoin:

BTCUSDDaily

Price: $10,343

Market Cap: $185.528bn

Thoughts: In last week’s Market Outlook, I mentioned that Bitcoin had (albeit only slightly) raided the top of the range at $10,960 and looked poised to make a move to the bottom of the range at $9,080, with two probable scenarios: the first of these involved another raid of the top of the range to flush out early shorts before moving down; and the second involved a textbook breakdown and intraweek downtrend.

This past week, price consolidated within the range of the prior week, forming what is likely to be an Inside Week when the candle closes tonight. These commonly lead to expansion to one side of the weekly range, and often also fail to close beyond these extremes, instead reversing and taking out the other end of the weekly range in subsequent weeks. This gives us a possible framework for the price-action over the next couple of weeks, and leads me to believe that the first scenario is likely to play out, with the caveat to this being that we don’t get a higher timeframe close above $11,000, which would negate our idea that price would like to revisit the bottom of the range at $9,080 before continuation higher.

If price begins to break up above $10,960 next week, I will be looking for a swing-failure to form on the Daily chart, at which point I would be looking to short down to the bottom of the range. If price manages to close the Daily above $11,000 next week, I will not be taking any trades until I have seen the Weekly close. The third scenario here also gives us no high probability trade setup, as it involves price simply breaking down next week and moving below this week’s low, which negates our notion of inside week failure occurring.

Beyond this, I am not paying much attention to Bitcoin whilst it remains tightly consolidated, opting not to attempt to play the intraday movements that are occurring with low volatility; instead, I would like price to give me an indication as to its direction for the next few weeks before making my move.


Ethereum:

ETH/USD

ETHUSDDaily

ETH/BTC

ETHBTCDaily

Price: $189 (0.01827 BTC)

Market Cap: $20.365bn (1,968,895 BTC)

Thoughts: As anticipated in last week’s post, Ethereum has begun to move up against Bitcoin, reversing some key areas of resistance this past week and finally looking as though a local bottom may be in. Further, ETH/USD has began to decouple from BTC/USD, suggesting that ETH/BTC’s current outperformance may have some legs.

Looking firstly at the Daily chart for ETH/USD, we can see that, despite price briefly breaking beneath trendline support from December 2018, this past week has seen the Daily close back above that key level, reclaiming it as support. More significantly, price appears to be reclaiming the $189 prior resistance as support. That said, price remains firmly below the 200-day moving average, but I am liking what I am seeing; this is the first time since the yearly high was printed that significant levels are being reclaimed. Volume remains flat and I would expect to see a breakout in volume soon to confirm the reversal if this is indeed Ethereum’s bottom.

Turning to ETH/BTC, from the Daily chart, we can see that price broke above trendline resistance this past week, closing firmly above it and above reclaimed support at 0.0175 BTC. As I mentioned last week, this was my key indicator for a reversal in ETH/BTC, and I expect to see 0.02 BTC tested next as the subsequent level of significant support turned resistance. Lending weight to this idea is the bullish engulfing that printed this past week; the only thing lacking here is volume, which remains a concern. Nonetheless, I do expect we see a retest of 0.02 BTC, but prices beyond this and a reclamation of that level will require volume returning to the market.


Monero:

XMR/USD

XMRUSDDaily

XMR/BTC

XMRBTCDaily

Price: $75.23 (0.00727 BTC)

Market Cap: $1.294bn (125,225 BTC)

Thoughts: Monero is lagging behind Ethereum at the moment, with XMR/USD currently in consolidation beneath trendline resistance, indicating relative weakness on its part. That said, the Daily chart shows us that the $72 support has been reclaimed, and if Ethereum continues to move up, I expect Monero to be dragged up with it.

Looking at XMR/BTC, however, we can see no clear indication of a reversal, with price currently unable to reclaim the prior range support at 0.0073 BTC convincingly. That said, the most significant level for me is 0.00773 BTC; if price can break above this level, I expect to see a move back to prior range highs above 0.0094 BTC; if price fails to breach this level upon a retest, I am expecting new lows. No position for me, at the moment.


EOS:

EOS/USD

EOSUSDDaily

EOS/BTC

EOSBTCDaily

EOS/ETH

EOSETHDaily

Price: $4.08 (39,410 satoshis)

Market Cap: $3.797bn (367,231 BTC)

Thoughts: As I mentioned at the beginning of the month, EOS (and in particular EOS/ETH) is a significant indicator for sentiment regarding altcoins, with periods during which EOS outperforms ETH correlating heavily with altcoins en masse outperforming Bitcoin, and vice-versa. Over this past week, EOS has outperformed the large-caps, including Ethereum, and EOS/ETH looks very bullish.

Looking at EOS/USD, we can see that the past week or two have been kind, with price rallying from the lows at $3.03 to above $4 this week, turning resistance at $3.77 into support. That said, price is currently lingering beneath trendline resistance from June. Moreover, there is a chunky zone of resistance between $4.38 to $4.78, and until we are clear of this I am not expecting anything so outlandish as new yearly highs. That said, there is clearly room to run for the next couple of weeks if price can close above trendline resistance, and, given how EOS looks against BTC and ETH, I don’t see there being much in the way of trouble here.

Looking now at EOS/BTC, we can see that price closed the Daily above significant resistance at 0.000385 BTC with no real resistance to follow until 0.00047 BTC. I am expecting a test of this level to follow, but it is what occurs at that point that I am most interested in; either, we reject and EOS (and alts, overall) continue their downtrends after the relief bounce, or price is able to reclaim it as support and I expect we see some significant, possibly cyclical reversals to occur in the altcoin market.

Finally, looking at EOS/ETH as our sentiment indicator, we can see that price looks ready to make a move up to 0.024, suggesting further outperformance to follow next week. As such, I am expecting another drop in Bitcoin dominance to occur in conjunction with this.

And that concludes this week’s Market Outlook; I hope you’ve enjoyed the read.

Feel free to leave any comments or questions below and I shall get back to you!


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