Market Outlook #68 (26th January 2020)
Hello, and welcome to the 68th Market Outlook.
In today’s post, I’ll be covering Bitcoin, Ethereum and Monero, as usual, plus taking a look at Komodo, Blocknet and Aion:
Market Cap: $154.049bn
Thoughts: In last week’s Market Outlook, I mentioned that we may well have found a local top at $9100, given the bearish engulfing candle at resistance, and that we could expect to spend some time finding new support.
Over the past week, this does appear to have been the case, although I am uncertain yet as to whether we are forming a new base above $8200 or whether price will start to break down from here and move a little lower.
To give some greater context, I have provided a Weekly chart, where things do seem to be rather bullish for the first time since June 2019. Despite the 6-month downtrend, at first glance we can see that price has been unfolding as a protracted bull flag following the breakout above $6000 in April 2019. Moreover, we can see that this entire downtrend has been occurring on declining volume, which is highly characteristic of a pullback within a bull market; it almost seems as though we’ve been playing out a lower timeframe bear cycle within a new, long-term bull cycle (something that occurred often in the previous cycle). Most importantly, we can see that, following the sweep of the lows at $6530 in December 2019, price rallied hard and has actually closed above the trendline resistance of the flag on slightly increased volume, relative to prior weeks. It now appears that this past week has simply been a period of consolidation in which price has retested the trendline breakout.
Looking at the first Daily chart, we can see all of this more clearly, with a period of consolidation in Q4 2019 that appears rather similar (although condensed) to that which preceded the initial breakout in Q1 2019. In fact, I would argue that this was likely reaccumulation at the 360-day moving average, which would be in-keeping with historical cycles. Since the New Year, price has clearly broken above this consolidation, reclaiming $7700 as support, above which I remain bullish. We also broke out above trendline resistance, as mentioned previously, putting in a local swing-high at $9225, from which point we have descended back towards the breakout level at $8220. This past of decline has also occurred on decreasing volume, which is a bullish sign.
Looking at the final Daily chart, we can more closely see recent price-action. I am particularly interested in the $8200 area and the $7670 area; the latter of which coincides nicely with the 360-day moving average, above which I am bullish. If we start to see price break up from here, I will be looking to get long next week (or, more ideally, if price raids this week’s low of $8220 and prints a swing-failure). However, as the current trend from June 2019 remains bearish below $10600, it is also possible that this is simply another lower-high; if this is the case, we will see price close the Daily below $8200 next week, below which I will be looking for a short down to retest the 360-day moving average.
Price: $163.31 (0.01929 BTC)
Market Cap: $17.871bn (2,111,485 BTC)
Thoughts: Ethereum seems to be following Bitcoin’s lead for now, as ETH/BTC remains in consolidation.
Looking at ETH/USD on the Weekly timeframe, we can see a breakout of trendline resistance that occurred last week, although volume hasn’t quite shown up yet. I am particularly interested in $200, above which Weekly market structure will turn bullish.
Looking at the Daily chart for the pair, we can see that the local top of $180 came in just below the 360-day moving average but that, similarly to Bitcoin, this past week of decline has occurred on declining volume. Moreover, we can also see that price is failing to close the Daily below $160. This appears bullish to me and it seems that we can expect higher prices from here.
Looking at ETH/BTC, again we can see a similar pattern of trendline breakout followed by consolidation on declining volume, with price tightly wound between 0.0188 and 0.0195. If we see price close above 0.0195, I will be looking for long setups, with the expectation of continuation to 0.022.
Price: $63.37 (0.00748 BTC)
Market Cap: $1.103bn (130,405 BTC)
Thoughts: Monero, similarly to Ethereum and Bitcoin, has spent the past week in a low-volume decline against the Dollar, but its BTC pair is where I am most interested.
Beginning with XMR/USD, however, we can see that price poked its head above the 360MA last week and has since fallen off, as expected. Interestingly, we can see a clear swing-failure has printed with a very bullish reversal pattern forming above $56. There is no indication here that the pair’s uptrend is set to end just yet, particularly given the failure break down upon retest of $58 as support. I expect we will see $72 broken soon.
Looking at XMR/BTC, price is clearly doing its best to remain above 0.0074, having close above it on solid volume for the first time in months last week. It is also pressed up very tightly against trendline resistance at the moment. In short, I am waiting for a breakout above 0.0081 and then I am buying. Simple.
Price: $0.584 (6897 satoshis)
Market Cap: $68.92mn (8,143 BTC)
Thoughts: Komodo is a very interesting prospect at the moment, as it appears to be depicting the classical signs of the bottom of an altcoin cycle; one that we saw unfold innumerable times in Q1 2017.
Looking at KMD/USD, we can see that price has been inside a large range between $0.45 and $1.85 for the past 14 months, and that KMD has been refusing to move below range support. Since the New Year, price has started to form higher-highs and higher-lows from this base and a move above $0.70 appears imminent. Ultimately, price remains below the 360-day moving average, but movements in its BTC pair could alter this swiftly.
Looking at KMD/BTC, here we find all the signs of a bottom and the beginning of a new cycle. We had a significant downtrend that culminated in a period of consolidation above 6250 satoshis in September 2019, after which price briefly broke below range support and formed a classical spring at 5200 satoshis. Following this, price broke out above trendline resistance and rallied for a couple of weeks, peaking just shy of support turned resistance at 13600 satoshis in November 2019. This appears to be the test pump. Since, we have seen price decline back to original range support at 6250 satoshis. If this is indeed the bottom, we should see some consolidation here (reaccumulation) followed by a breakout above 8000 satoshis and continuation above 13600 satoshis and the 360-day moving average. This is what I am expecting, to be honest.
Price: $1.87 (22,100 satoshis)
Market Cap: $12.108mn (1,430 BTC)
Thoughts: Blocknet has had a crazy week, as many will know, with it rallying almost vertically.
Looking at BLOCK/USD, we can see that price has been toying with trendline resistance from December 2017 for a long time, with an initial breakout above it in May 2019 followed by lower prices but a refusal to move back below the trendline. Price then consolidated above $0.56 for a couple of months and has spent the past week breakout out with incredible momentum. It has found resistance – surprise, surprise – at the 360-day moving average.
Looking at BLOCK/BTC, we see a very similar picture, with price hitting lows of 7610 satoshis in December 2019; incidentally, this was the breakout level that preceded its 2017 bull cycle. Funny how these things work out, isn’t it? After breaking out above both range resistance at 9500 satoshis and trendline resistance from May 2019, price has also cleared support turned resistance at 16000 satoshis in one fell swoop, also peaking at the 360MA. I am looking to buy BLOCK on dips from here.
Price: $0.078 (922 satoshis)
Market Cap: $28.317mn (3,344 BTC)
Thoughts: I have actually never looked at AION before in my life, but someone mentioned it on Twitter and I was astounded at the volume coming in over the past few weeks.
Looking at AION/USD, we can see a very similar pattern of price-action to that of BLOCK, with price finding support at $0.045 in December 2019. Since then, it has broken above short-term resistance at $0.06 and is climbing gradually on ever-increasing volume towards significant support turned resistance and the 360MA at $0.10.
Looking at AION/BTC, we can see that price has been range-bound between 635 satoshis and 1040 satoshis since August 2019 and that, beginning in December 2019, volume began to pick up significantly, with this past week trading the highest volumes in over a year. I am going to be buying inside this range, with a soft stop-loss on a Daily close below range support at 635 satoshis, looking to hold cyclically. More risk-averse speculators should await a breakout and retest of 1,000 satoshis.
And that concludes this week’s Market Outlook.
I hope you’ve found some value in the read.
As ever, feel free to leave any questions below!