Market Outlook #66 (12th January 2020)
Hello, and welcome to the 66th Market Outlook.
In today’s post, I will be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as usual, plus taking a look at NEO.
Market Cap: $147.785bn
Thoughts: In last week’s Market Outlook, I mentioned that, if price was able to close convincingly above the prior support turned resistance at ~$7700, we would likely get some bullish continuation. Given that the Daily had begun to look quite bullish by the end of last week, it was unsurprising that this is precisely what we have seen over the past few days.
Looking at the Daily chart, we can see that price actually managed to close above the trendline resistance from June for the first time, having rejected on several prior occasions; price subsequently printed a high of $8465 and then completed a textbook retest of the trendline as new support, also retesting the breakout level of $7700. Moreover, a bullish engulfing candle formed on this successful retest and price has since spent a couple of days in consolidation. In my opinion, this is about as textbook as it gets regarding bullish continuations: a support level from October became resistance in November and remained so through the turn of the year; price broke above this on increasing volume this past week and then broke above trendline resistance and has since retested both successfully; all that is left is for a new high to form above $8500. Adding confluence to the short-term bullish outlook is the fact that price reclaimed the 360-day moving average.
Now, looking at the 4H for more clarity, we can see that price thrust above the resistance zone at $7700 early in the week, immediately retesting and continuing towards $8500. This became the weekly high and price has since retraced the entire breakout move, clearing out the stops below $7740 and printing a swing failure at the breakout level; this is significant, as it is suggestive of further upside. No free rides, remember? Following this swing-failure, price has again rallied and is now consolidating below the weekly high of $8465. I expect next week we will see this high broken and I am long from ~$7800, ultimately looking for $8900 before any serious resistance is found.
Price: $143.96 (0.0176 BTC)
Market Cap: $15.727bn (1,927,659 BTC)
Thoughts: Unlike Bitcoin, Ethereum hasn’t quite been able to break above key resistance areas this past week, although it is pressing up very close against them as the week comes to its end.
Looking at ETH/USD, we can see that price failed to close above trendline resistance twice over the past few days, but remains in consolidation beneath it, having rallied 25% since the low of mid-December. Above the trendline lies support turned resistance between $152-161, which will be the real test; until this area is cleared, daily market structure remains bearish.
Looking at ETH/BTC, price has formed short-term trendline resistance from November, rejecting three times now. More interestingly, however, ETH/BTC swept the low at 0.0171 this past week but closed above it, printing a swing failure. It is likely that we can expect another test of trendline resistance this coming week, as it continues to cap price and press against it, but whether a breakout will come, I am unsure, particularly given the bullish outlook in BTC/USD for the short term. If we can get above the trendline, I would expect 0.0188 to be the next significant resistance, above which the pair would start to revert to a bullish outlook. Until then, I’m bearish.
Price: $59.64 (0.0073 BTC)
Market Cap: $1.037bn (127,157 BTC)
Thoughts: As I mentioned in last week’s post, Monero remains in consolidation across both its pairs around resistance areas, with this past week giving no further indication as to the direction of the breakout move. In fact, XMR/USD spent the early part of the week moving up, but found resistance at $58, which I mentioned would be the first area that consolidation would likely occur; it seems this is the case, as the following four or five days have been spent doing rather little except bouncing around the $58-59 area, with wicks outside that range.
Looking at XMR/BTC, funnily enough that 0.0073/74 level remains the only level of significance, although a lot of volume has been flying into Monero over the past week as 0.0073 and trendline resistance edge closer to merging. This is precisely the sort of volume we’d like to see accompany a breakout above both 0.0074 and trendline resistance, as it would confirm the validity of the bullish breakout and I would be an interested party once again. If this does occur over the next couple of weeks, which, if it is going to occur (as opposed to further downside), must do sooner rather than later, I would look to buy spot upon a retest of ~0.008 as support. We shall see, I’m sure.
Price: $10.21 (0.00126 BTC)
Market Cap: $725.583mn (88,984 BTC)
Thoughts: NEO is in quite an interesting spot against the Dollar. As can be observed on the NEO/USD chart above, price has now twice rallied above the 360-day moving average, having failed to sustain the breakout on both occasions, with the most recent attempt in November 2019 culminating in a near-full retrace of the move from $6.50 to just shy of $15, although, most importantly, price has found support at $7.90; a historically-significant pivot. Moreover, at $10.20, price is now also pressing up against the 360MA for the third breakout since June 2019, with $15 the next likely area of resistance. Since September 2019, a low has been formed, followed by a higher-high and a higher-low; if a move above $15 is sustained, it is likely that NEO has begun a new bull cycle and I would expect $24.50 to be retested.
Looking at NEO/BTC, we can see that price broke out above trendline resistance from Q1 2018 in October 2019, testing and rejecting at the 360MA, which has capped price since the bear market began. A double top was printed around 0.00155 and price fell off to find new support at 0.00115, where it is currently consolidating. The 360MA looms overhead but I am expecting a breakout of this tight consolidation to the upside, followed by another test of both the 360MA and 0.00155. Above this, there is major resistance at 0.0018, which, if NEO can get above, it is plain sailing.
And that concludes this week’s Market Outlook.
I hope you’ve enjoyed the read – as ever, feel free to leave any questions below.