Market Outlook #71 (16th February 2020)
Hello, and welcome to the 71st Market Outlook.
In this week’s post, I’ll be covering Bitcoin, Ethereum and Monero, as usual, plus taking a look at Ripple, Algorand, Siacoin and Zilliqa.
Market Cap: $180.708bn
Thoughts: In last week’s Market Outlook, I mentioned that price was approaching significant resistance on the Weekly timeframe and that I expected a retest of the $10,580 high before we saw any dips.
Beginning with the Weekly chart, we can see that price rallied up into the prior swing-high and appears to have rejected here, though, importantly, it did not print a swing-failure; price failed to move above $10,580, stalling at $10,550. This forms somewhat of a double top at this level – an area where bears would now be placing their stops. As I do not imagine we will rally $500 before today’s close, I expect next week to bring a bit of a dip, with $9520 being the next area of support; this is level that price closed above last week, reclaiming it as support – we want to see this level hold, should it be tested.
Turning to the Daily chart, we can see the double top more clearly, as well as the rising wedge that appears ready to give way. I have also marked out $9450 as prior support that became resistance in October 2019 and is yet untested as reclaimed support. Below this, we also have $9020 – an old level of support that now sits right above the 200-day moving average. As such, I will be looking to get long inside this range, ideally on a swing-failure of the low at $9023, right into the 200MA. If this area fails to hold, I would expect price to fall back towards the 360-day moving average, which would provide an optimal long entry with a target of the double top at $10,580.
Turning to the 4H, here we can clearly see the precariousness of the current price-action, with a swing-failure having printed at the highs around $10,500, leading to a break in market structure and a lower-high. Whilst price remains below $10,065, it is bearish short-term. I would expect the clean lows at $9720 to be taken out next week.
Price: $264.04 (0.02667 BTC)
Market Cap: $28.973bn (2,927,160 BTC)
Thoughts: Ethereum has had one of the wildest weeks in recent memory, outperforming pretty much everything.
Beginning with ETH/USD on the Weekly timeframe, we can see that, with price having closed above the prior swing-high at $224 last week, the rally continued this past week with volume continuing to rise. If we do get a Bitcoin-led dip next week, a retest of $224 would be a perfect opportunity in my opinion. The highs above at $370 remain the primary target, as I expect this area will be retested over the coming months.
Turning to the Daily chart, we can see the parabolic nature of the rally more clearly, with each leg of the rally steeper than the previous, culminating in the current near-vertical rise that has taken it to $290. This was the level that gave way back in July 2019, turning market structure bearish, so it comes as no surprise that we appear to have found some sellers (at last) in this area. It is interesting to note that the parabola is not yet broken, although if we do see a dip in BTC/USD next week it is highly like that ETH/USD will follow it down, given the recent correlation. If it does fall, that area between $200 and $225 looks perfect. I do not expect price to fall back below the 360MA or the 200MA before it retests $370, to be honest.
Turning to ETH/BTC, from the Weekly chart we can see that price found zero resistance at the double bottom ~0.0245 that ultimately led to capitulation back in June/July 2019. This was very similar to the expectation that $6000 would provide significant resistance for BTC as we rallied off the floor but no such resistance was found. This is very bullish, in my opinion, and I would be extremely greedy should we see a dip back to 0.0245 to retest it as reclaimed support.
Finally, looking at the Daily chart, the strength of the rally is quite breathtaking, particularly with the rising volume profile and the close above the 360-day moving average. This is pretty much the indicator I needed to see in order to validate my thesis that macro reversals are underway. As such, I am looking to buy dips when we get them, with 0.0245 lining up with the 360MA as the most opportune entry. Moreover, this is also a signal that dips in altcoins in general are buying opportunities for the foreseeable future.
Price: $87.84 (0.00887 BTC)
Market Cap: $1.532bn (154,845 BTC)
Thoughts: Monero has been continuing its gradual climb to prior resistance levels, though it does appear to be slowing down here.
Looking at XMR/USD, we can see that price stopped short of the prior swing-high at $98, which I mentioned would provide some resistance last week. The uptrend remains intact, however, and price was able to close above $83, which was old support turned resistance from back in September 2019. One thing that does concern me here is the declining volume on the rally, which makes me think that perhaps a move back to at least $83 should be expected. If this and trendline support should give way, I would be looking at $72 for longs.
Turning to XMR/BTC, I recently exited my long at 0.00938 as price appears to be stalling at the 360-day moving average. The next area of resistance is 0.01, but I think we may retest trendline support before we move up. If we can get back to the resistance turned support at 0.0083, I would like to rebuy. Again, volume appears to be declining on the rally. Ultimately, however, I do believe we will start making a move up above 0.01 and reclaim the range at 0.012.
Price: $0.30 (3057 satoshis)
Market Cap: $13.218bn (1,336,018 BTC)
Thoughts: Ripple is one of the laggards among the largecaps, having failed to move up towards its 360MA whilst almost all other top 10 coins have.
Looking at XRP/USD on the Weekly timeframe, we can see that price broke out above trendline resistance from June 2019 a couple of weeks ago on strong volume, and has now found resistance at the prior swing-high at $0.36. Volume continues to rise and I am firmly of the belief that dips are for buying, with the ultimate target being the high at $0.56 from June 2019.
Turning to the Daily, price broke above the 360MA this past week on the highest volume traded since May 2019. We can also see that the prior support at $0.27 that was lost in November 2019 has been reclaimed, providing support last week as price consolidated above the 200MA. I wouldn’t be surprised to see something similar occur here above the 360MA, with the subsequent leg up taking price above $0.36.
Now, looking at XRP/BTC on the Weekly timeframe. we can see that price has been range-bound between 2357 satoshis and 3971 satoshis for 31 weeks, with volume rising each week this month. 3971 satoshis is in fact the double bottom (just like that of ETH) that preceded capitulation and this is the gap I expect to be filled. If price can close the Weekly above here, I would expect sustained upside with the next resistance above 5000 satoshis.
Finally. looking at the Daily chart, we can see that price closed above the 200-day moving average for the first time since it was lost in March 2019, with the 2900-satoshi level also coinciding with prior support turned resistance. I am already long XRP/BTC but will add to my position if we retest the 200MA this coming week, with my target at 3900 satoshis.
Price: $0.328 (3300 satoshis)
Market Cap: $184.658mn (18,663 BTC)
Thoughts: Algorand is one of the few coins available as a derivative that hasn’t experience a bull cycle, having been created during the bear market.
Beginning with ALGO/USD on the Weekly timeframe, price closed above $0.30 last week for the first time since being range-bound between $0.16 and $0.35 between September 2019 and this month. Volume on the week was significant but this past week has seen rejection above the range resistance. As such, I think we might see a move back to retest $0.30 before more upside.
Turning to the Daily timeframe, we can see that price closed above the 200MA for the first time in its history and is now retesting it as support. Volume is consistent with a bullish breakout and pullback with the recent dip occurring on declining volume. The breakout level at $0.30 is still the key level to watch, as a move below this would be bearish; if price finds support here, I would expect continuation to $0.48.
Looking at ALGO/BTC, here we can observe the bearish test of resistance at 3900 satoshis, subsequent to last week’s bullish close, with volume the highest of all time. I expect we will see a dip followed by another leg up to close above 4500 satoshis in the next few weeks. Turning to the Daily chart, I have marked out the trajectory I expect price to take from here, with a retest of 2900 satoshis providing the best dip-buying opportunity, with price having failed to hold above the 200MA.
Price: $0.0028 (29 satoshis)
Market Cap: $119.011mn (12,029 BTC)
Thoughts: Siacoin is leading the reversals for the low-satoshi coins, having broken above trendline resistance against the Dollar, as can be observed above, as well as the the 200MA and 360MA. Against BTC, we see similar strength, although the 360MA is currently capping price at 36 satoshis. Price seems to have formed a double bottom at 16 satoshis in January, which preceded this current rally to range resistance at 30 satoshis. Volume has been impressive on the ascent and I expect the next test of 36 satoshis to lead to a breakout, with no real resistance until 60 satoshis beyond this. If we get a dip to 25 satoshis, I will be adding to my position and looking to take initial profits at that prior support level ~60 sats.
Price: $0.0082 (83 satoshis)
Market Cap: $81.619mn (8,250 BTC)
Thoughts: Zilliqa is another low-satoshi coin, but one that has not experienced a bull cycle, despite being around for two years at this point. Fundamentally, it is very strong, and you can read more on that here. Regarding price-action, we can see that it has been range-bound between 50 satoshis and 90 satoshis for over 6 months, with price having closed above the 200-day moving average against BTC for the first time since January 2019. I have a position from 58 satoshis that I am looking to hold for an entire cycle, with my first target at 200 satoshis, followed by 350 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!