Market Outlook #70 (9th February 2020)
Hello, and welcome to the 70th Market Outlook.
In this week’s post, I will be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as usual, plus taking a look at Litecoin, Tron and Quant Network.
There has been a great deal of movement in the market over the past week and I expect there will be no shortage of volatility this coming week, either.
Market Cap: $183.721bn
Thoughts: In last week’s Market Outlook, I mentioned that the bullish price-action of the prior week indicated a likely move above the $9,600 swing-high and a test of $10k, which, as of today, we have completed. I also mentioned that I’d be expecting the high at $10,600 to be taken out if we successfully moved above $10k; let’s take a look at whether this remains likely.
Firstly, I’ve provided a Daily chart that spans the past few years and simply drawn one trendline that has supported price throughout this time. It appears price initially bottomed out at that trendline support back in Q4 2018, before rallying to the $14k high that remains intact. Following this, price spent several months in a downtrend, ultimately retesting that trendline as support and reversing sharply through Q4 2019. As 2020 arrived, price had also broken out of trendline resistance from the May 2019 highs that had been suppressing price. If price is to follow its historical pattern, it is likely we will get another test of this trendline support at some point in the future prior to moving towards new all-time highs.
Turning to the second Daily chart, here we can see that the period of consolidation between November – December 2019 was most certainly an accumulation range around the 360-day moving average. Since breaking out above $7700 and closing back above the 360MA, Bitcoin has rallied another ~33% in a rising wedge. More importantly, it has been turning former resistance into support on the way up and is now approaching the $10,600 swing-high that preceded the move to the lows at $6,400. It is this high that is most significant, as a close above it would turn market structure bullish for the first time since the $14k high was formed, confirming the longer-term reversal. Above that, there is also a double top at $11,000, which is prime for a stop run. If we are to find resistance anywhere, I would expect it to be between these two levels, from which point a healthy pullback would be a good dip-buying opportunity. Rather than jumping the gun, however, we must remember that despite the strength of this rally, we are yet to put in a higher-high. Once $10,600 is taken, that’s when I would be highly confident that the low is in and $14,000 is next on the list. Regarding levels to buy dips at, a move back to $9,150 would be perfect; more perfect still would be a retest of the 360MA at some point in the near future, though this will likely be at a higher price than the ~$8,000 it is currently sitting at.
Price: $229.12 (0.0227 BTC)
Market Cap: $25.117bn (2,487,688 BTC)
Thoughts: Given the ridiculousness of the movements in Ethereum, I have provided both a Weekly and a Daily chart for its BTC and Dollar pairs in order to provide greater context.
Beginning with the Weekly chart for ETH/USD, here we can see that the low post-bull market was formed at $80 back in November 2018 and that price rallied for months following that, only to peak at prior support turned resistance at $360, which remains intact. Price has since followed BTC in a multi-month downtrend, but bottomed in late 2019 at $116. The reversal from here has been phenomenal, with Ethereum doubling in price since. Price has also broken out above trendline resistance from the June 2019 high and looks set to close the Weekly above both the $200 and $225 swing-highs, turning market structure bullish and opening up a move to retest $360. Overall, if we look at how price has moved off from $116, it appears to be a higher-low of a macro reversal, with $80 being the original low; the confirmation of this scenario would be a Weekly close above $360.
Turning to the Daily chart, we can see that price has been strongly supported during this rally, forming trendline support at $137 that has remained firm since. Over the past couple of weeks, price has also closed strongly back above the 200MA and 360MA and is now at prior support turned resistance ~$230. I could see Ethereum taking a breather here, if only to retest trendline support and the double top at $200 as new support, which would be a perfect opportunity to get long. Ultimately, I believe ETH/USD is simply making a longer-term reversal and that we will be seeing a retest of $360 before the end of the year, at a conservative estimate. The next area of resistance is $270, at which point we are likely to find some sellers; beyond that, there is very little until the $360 high. If price does dip here and falls below $200, this would be a bearish sign and I’d expect to see panic selling back to $156 if it occurs.
Turning to ETH/BTC on the Weekly timeframe, a similar scenario is playing out, albeit with the pivot point within spitting distance. Price bottomed back in August 2019 at 0.016 and then appears to have formed a higher-low in December at 0.017. We are now pressing right up against significant support turned resistance between 0.023 and 0.0245; if the Weekly is able to close above 0.023, I would consider market structure to have turned bullish and would expect 0.0245 to provide little resistance following that. A move above 0.0245 and I think we rally all the way to 0.042 over the coming months.
Finally, looking at the Daily chart, we can see that price reclaimed its 200-day moving average for the first time since May 2019 and has moved well beyond it. Price has also broken out above trendline resistance from October and volume is starting to pick up, although it isn’t great yet. Significantly, yesterday price rallied above the range high at 0.023 and closed below it, printing a swing-failure; this would indicate incoming downside if price is unable to close back above it in the next couple of days. If we do see a dip, I don’t expect it to last very long to be honest, as the demand has been huge on the way up, with all intraday dips being eaten up immediately. I think we could see a move back to the trendline support, but, if I’m honest, the strength of the Weekly candle is more important than the Daily SFP; if we close today around here, I would expect more upside next week to test the 360MA and prior support turned resistance at 0.0245. The ultimate dip buying-opportunity would be a retest of 0.02, so I will be setting some bids there should we start to move down from here.
Price: $83.70 (0.00829 BTC)
Market Cap: $1.459bn (144,577 BTC)
Thoughts: Monero continued its tear over the past week, breaking to new highs effectively every day against the Dollar.
Looking at XMR/USD, the strength of the rally is clear to see, with price turning former resistance into support at every level since the rally began in December 2019. The dip to $58.50 ended up being a huge dip-buying opportunity, as I mentioned a couple of weeks ago, and price has now closed comfortably above the 200-day and 360-day moving average. The only thing concerning me here as price continues to break new highs is that volume has begun to decline. That said, there is very little resistance between here and $100, so I see no reason for the rally to conclude just yet and I expect trendline support to remain firm at least until a retest of that resistance.
Turning to XMR/BTC, we can see that, following breakout above the pivot at 0.0074, price consolidated below long-term trendline resistance and then broke out above it this past week, closing above the swing-high at 0.0081. We now appear to be ready for a move to test the 360MA, which looms overhead at 0.009. Beyond this, the next area of significant resistance will be 0.01. Volume remains quite strong, although not as strong as during the initial breakout; if anything, I’d like to see more volume come in as we test the 360MA. Overall, the short-term outlook remains bullish and I remain long from ~0.0076.
Price: $77.55 (0.00768 BTC)
Market Cap: $4.966bn (492,041 BTC)
Thoughts: Litecoin paints a similar picture to that of other largecaps, and I see no reason why the recent rally should end just yet.
Looking at LTC/USD, we can see that price has more than doubled since the bottom at $35.50 in December 2019, turning prior resistance into support (as well as reclaiming old support levels at $43, $50 and $61) on the way up. It did stall at the 200MA a few weeks ago but the dip was in demand and price rallied hard to take out the old high above $61 and found its next bit of resistance at the 360MA. Here, we consolidated for a few days and then continued upwards, now having reclaimed the $75 level, which was support back in July 2019. The next area of significance for Litecoin is $100, just like Monero.
Turning to LTC/BTC, we see a similar bottoming fractal playing out to that of other largecaps, where a double bottom formed around 0.0062 in Q4 2019 before being broken and leading to new lows at 0.0055; this, however, turned out to be a spring, as price sharply reversed and reclaimed 0.0062 as support in January, then closing above the 200MA for the first time since Spring 2019. There is a huge gap from here if Litecoin is able to close above prior support turned resistance at 0.0079, where it currently sits, with the next level coming in at 0.0099, in confluence with the 360MA. If we do dip here at resistance, I’d be looking to buy a retest of 0.007, which was old support from November 2018 that became resistance in confluence with the 200MA a few weeks ago.
Price: $0.022 (220 satoshis)
Market Cap: $1.482bn (146,718 BTC)
Thoughts: Tron looks ready for lift-off as it tackles an important pivot zone against the Dollar.
As can be observed by the TRX/USD chart, we can see that $0.022 had provided support (along with the 200MA) for several months in 2019 before giving way and being retested as resistance in October 2019. Price then printed what appears to be a double-bottom at $0.011 and has since rallied back to this pivot, which is now the 360-day moving average also, having reclaimed the 200MA last week. If price is able to sustain a move above this pivot, I think we see another 100% rally to test the high of June 2019 at $0.046.
Looking at TRX/BTC, we can see that price initially bottomed at 134 satoshis in September 2019, then rallying to test the 200MA in October, falling short and peaking at 246 satoshis. Price then fell off, suppressed by the 200MA, bottoming again above support at 166 satoshis at the turn of the New Year. Price has since been climbing gradually, closing above the 200MA for the first time in months. Volume has been increasing during the rally and price now sits in consolidation beneath the swing-high at 246 satoshis. I expect we will see continuation of this move next week, with price closing above the level and testing 275 satoshis and then the 360MA at 300 satoshis, where there will be significant resistance to overcome if Tron wants to move any higher.
Price: $3.84 (37,977 satoshis)
Market Cap: $46.315mn (4,585 BTC)
Thoughts: Here, I have provided a 5.5R setup on Quant Network, as I believe we are looking at a dip-buying opportunity.
From the chart above, we can see that the all-time low was formed at 21,700 satoshis in May 2019, followed by a rally that peaked at 141k satoshis. Since then, price has been range-bound between these two levels but has been forming lower-highs and lower-lows, ultimately putting in the current swing-low at 31,500 satoshis in January. The volume that came in at that low was unprecedented and price rallied back to retest prior support turned resistance at 54k satoshis. Price failed to break through and has come off, now trading at 38,800 satoshis; I am expecting more demand to come in at this level, especially when one considers the macro altcoin market at present. I am buying here with a soft stop-loss on a Daily close below the swing-low at 31,500 satoshis; I would not exit if we simply traded below the level and closed back above – only on a clean break. I am looking for 88,000 satoshis.
And that concludes this week’s Market Outlook.
I hope you’ve found some value in the read.
If you have any questions, feel free to leave them below!