Market Outlook #58 (27th October 2019)
What a crazy week we’ve had. In this week’s Market Outlook, I will be looking at the immense volatility in Bitcoin, as well as Ethereum, Monero and recent movements in NEO. Needless to say, there’s much to cover, so I shall refrain from any more preamble…
Market Cap: $170.343bn
Thoughts: It’s funny how things work out sometimes… in last week’s Market Outlook, I mentioned that I was expecting a raid of the double bottom at $7400, at which point I’d be buying some spot and awaiting a swing-failure before getting leveraged long. This doesn’t often happen, but price played out to a tee. Spot was bought on the break of $7400 and price printed a swing-failure on the Daily; however, due to the bearishness of the candle close, as can be seen on the Daily chart provided above, I decided to await the Weekly close prior to taking any leveraged positions. Lo-and-behold, price rallied a monstrous 35%+ from the lows in the space of 48 hours, all but confirming that the bottom for this leg is in and that we remain in a macro bull market.
Regarding that Weekly close, looking at the Weekly chart provided, we can see a couple of very important things here. Firstly, price, if we close tonight above $7500, will print a swing-failure of the prior Weekly swing-low. This is the first sign of expected bullish continuation. Secondly, if price closes above $8800, we will print a bullish engulfing of the prior 3 weeks of price-action; this is huge. In such a case, I will be opening a low-leveraged long at market after tonight’s close.
Looking now at the Daily, we can see that price raided that double bottom at $7400, coming within a few hundred dollars of the 360-day moving average. A swing-failure of this level was printed, price consolidated for a day and then rallied over $1000 to close the following day above $8350, turning market structure bullish. This was followed by another huge expansion, with price rallying above $10,600 but ultimately closing around $9400, in which area it remains today. I expect we shall see a little consolidation early next week followed by bullish continuation into November if price closes the Weekly above $8800. Exciting times ahead…
Price: $181.58 (0.0192 BTC)
Market Cap: $19.668bn (2,079,618 BTC)
Thoughts: Ethereum also seemed to play ball this past week, as ETH/BTC dropped off to retest 0.0188 as Bitcoin rallied, as expected; however, given Bitcoin’s potentially seriously bullish Weekly close, I am unsure of the immediate direction for the pair, though I have left in the trajectory marked out in last week’s post. I am only expect more upside for ETH/BTC if it is able to hold above 0.0188; any close below that level and I expect we shall see new lows.
ETH/USD, however, is in a very confusing spot, having left a double bottom at $152 whilst also printing a swing-failure of high at $198 and a failure to break out above trendline resistance. Such conditions would usually prompt me to get short at market, but given how BTC/USD looks at the moment, I am reluctant to. Perhaps, however, this is an indicator for ETH/BTC’s future weakness rather than the bullish continuation I am looking for…
Right now, I am taking no positions in Ethereum (except for my EOS/ETH long position, which is in expectation of EOS outperformance of Ethereum, in whichever direction).
Price: $58.20 (0.0061 BTC)
Market Cap: $993.6mn (104,972 BTC)
Thoughts: As mentioned in last week’s post, despite Monero catching a strong bid on good volume, it failed to reclaim the 0.0073 resistance and since fell victim to the Bitcoin rally, collapsing to new lows at 0.006 BTC. XMR/USD also remains bearish as it wicked into the 360-day moving average and rejected it as resistance. Until Monero starts turning these resistance levels into support across both its pairs, the outlook is not bright for the privacy major. I would not be interested in it until it can overcome that trendline resistance so evident on XMR/USD and reclaim 0.0073 against BTC.
Price: $10.43 (0.0011 BTC)
Market Cap: $735.57mn (77,640 BTC)
Thoughts: NEO bucked the trend among major altcoins and has rallied along with Bitcoin this past week.
Looking at NEO/USD, we can see the compounded returns of the rallies, with price looking ready to close above the 360-day moving average for the first time in months. However, there is significant resistance in this $10.50 area. Nonetheless, the move has occurred on relatively high volume and has quite clearly turned market structure bullish after printing a swing-failure beneath $6.66.
Looking at NEO/BTC, we can see that not only has the pair broken above trendline resistance from the April highs on good volume, but also above support turned resistance at 0.00105, turning market structure bullish for the first time since Q1 2019. I will be looking to buy NEO on dips going forward, as I believe this is the beginning of a new market cycle for it. Having spent almost 3 months rangebound between 0.00083 and 0.00105, this recent breakout appears like a textbook move away from the latter stages of a bear cycle into the beginning stages of a bull cycle. We shall see, of course, what Bitcoin has to say about this, but it is very telling that even a 35%+ rally in BTC/USD did not prevent NEO from maintaining its strength.
And that concludes this week’s Market Outlook. I hope you’ve enjoyed the read!