Market Outlook #72 (27th February 2020)
Hello, and welcome to this week’s (albeit late) Market Outlook.
In today’s post, I will be covering Bitcoin, Ethereum and Monero, as usual, plus taking a look at the BTC pairs for NEO, ChainLink, Cosmos and Stratis.
Let’s crack on:
Market Cap: $161.408bn
Thoughts: In the previous Market Outlook, I mentioned the current precariousness of price, having broken market structure to the downside on the 4H chart, expecting the $9520 area to be tagged. We got that and more this past week as price broke down hard from local support.
Looking at the Weekly chart, firstly we can see that price is now approaching the historical trendline support that has remained firm for the majority of Bitcoin’s existence. This support was tested back in November 2018 when price the $3xxx area and was retested more recently in November 2019 when the low of $6330 formed. Moreover, I have drawn on the trendline resistance that had capped price from the July 2019 highs of $14k and that was broken on this most recent swing up. The confluence of these two trendlines lies around right around $8000. If we drop to that area, I will be adding spot Bitcoin to my longer-term holdings.
Turning to the Daily chart, we can see that equal highs have been left at $10,580, which is promising for bulls (no free rides, remember); moreover, we have more equal highs just above that at $11,030, and the fact that neither were swept prior to the current breakdown makes me think that this is most definitely a dip-buying opportunity and not a longer-term bearish reversal. I have marked out the areas of support, with the first being the $9020 swing-low that I mentioned last week. This area did not hold, which is quite significant as it was also the support that held price up throughout 2019 before the breakdown in September 2019. That said, price has now traded into the 50% fib retracement level of this entire swing up and is currently placed between the 360-day moving average (below) and the 200-day moving average, which it did happen to close above yesterday. Whilst I do think that price should find a good deal of support in this area, I am half-expecting a nasty shakeout wick below that swing-low at $8200 into the 61.8% fib. If we get down there and print a swing-failure of $8200, I will get long for at least a raid of the $11,030 equal highs.
To conclude, I think this dip will be short-lived and that Bitcoin will make a higher-low above the $6387 low from December 2019, likely between $7800-8200.
Price: $230.06 (0.0259 BTC)
Market Cap: $25.278bn (2,853,642 BTC)
Thoughts: Ethereum continues to look almost inconceivably bullish to me, having cut through every possible significant resistance level like a hot knife through butter over the past few weeks.
Looking at ETH/USD, naturally, given Bitcoin’s drop this past week, Ethereum has taken a breather also, finding resistance at $290 and falling off to support at the $224 level. This level was prior resistance and has confluence with the 38.2% fib retracement of the entire swing up from $116 to $290, with the past 48 hours of price-action having swept the most recent swing-low at $228 twice. There is a high probability, I believe, that this is the local bottom for ETH/USD, regardless of whether BTC/USD moves another few percent to the downside, though this is primarily due to Ethereum’s BTC pairing, which we’ll come to shortly. If we do see further downside from here, I am looking at $200 as the 50% retracement and prior resistance, which sits just above the 360-day moving average. Overall, I remain very bullish and am expecting the $370 highs to be retested in the coming months.
Looking at ETH/BTC, this is where we really see the demand for Ethereum at current prices, with the huge rally straight through historical support turned resistance at 0.02455 (a level that preceded capitulation). This level was then retested as support a couple of weeks ago, with the 360MA providing confluence there, and price rejected hard, rallying to highs of 0.02866, a little shy of the prior support at 0.02975. Since, we have dropped off again, with price retesting 0.02455 as support over the past few days and price appearing to once again reject a move below this level. Whilst we hold above 0.02455, I am very bullish. In fact, we could even dip to the 50% fib and prior resistance at 0.0229 and I would remain bullish; it is only if we lose that level that I would become bearish on Ethereum. At the moment, however, 0.02455 appears to be holding well and the next area of resistance would likely be 0.02975, followed by a retest of 0.041.
Price: $70.08 (0.0079 BTC)
Market Cap: $1.22bn (138,137 BTC)
Thoughts: Monero broke down at resistance but has now come into significant support on its Dollar pair, although could fall a little more against BTC.
Looking at XMR/USD, we can see that $98 acted as resistance, with the subsequent drop causing a break in trendline support from back in December 2019. Price then rallied and retested the trendline as resistance, failed and fell further to where it now sits: the 360-day moving average and 50% fib retracement at $70. This is also an area of reclaimed historical support and I expect price to remain above the 200-day moving average and 61.8% fib at $64. I do think we see new highs from this $64-70 area following some consolidation.
Turning to XMR/BTC, I have provided a longer-term chart to highlight the significance of the breakout from trendline resistance a few weeks ago. This was followed by a rally to the 360MA, which provided a lot of resistance. From here, we have broken down and I would not be surprised to see a retest of the 200MA and original breakout area at 0.0074 before new highs. If we come into 0.0074, I will be a buyer with an initial target of 0.01.
Price: $11.28 (0.00127 BTC)
Market Cap: $795.378mn (89,837 BTC)
Thoughts: NEO has provided a solid setup to get long here, in my opinion. As we can see, NEO/BTC broke out above historical trendline resistance back in Q4 2019 on significant volume, rallied up to the 360MA and then fell back to the 200MA, finding support there and building a base at 0.00115. Price then rallied off this base and made a new high earlier this month, closing above both the 360MA and the prior high at 0.00155 before falling back towards support this past week. I am a buyer here, as I expect this area to hold as support. My stop-loss would be at 0.00111, on a Daily close below the range support. I am expecting the prior support turned resistance at 0.00183 to be retested, so that is my initial target.
Price: $3.78 (42,720 satoshis)
Market Cap: $1.323bn (149,519 BTC)
Thoughts: In all honesty, there is very little to say about the ChainLink chart beyond the fact that it is clearly in a long-term bull cycle, with new highs having recently been found at 48,800 satoshis. We have since come back into the old highs at 37k sats, retesting this area as support and the reaction has been quite impressive, as price closed the Daily back above 40k sats having spent only day below it. I do expect us to come and retest 0.0004 as support once more, but I think that 0.0005 is imminent following that.
Price: $3.77 (42,534 satoshis)
Market Cap: $718.078mn (81,106 BTC)
Thoughts: ATOM has printed a classical accumulation pattern here, with three drives down, each forming an SFP of the prior swing-low, with bullish divergence for confluence. Moreover, this most recent decline has been accompanied by decreasing volume as price has come into the 200-day moving average and failed to close below 0.00041. This setup ticks all of the boxes for me, so I am long at 0.000417, with a stop below today’s lows at 0.000381 (again, depending on a Daily close below the level – a wick is irrelevant and would only provide more confluence for a reversal). My target is the most recent high at 0.00054.
Price: $0.38 (4,315 satoshis)
Market Cap: $38.095mn (4,302 BTC)
Thoughts: Stratis is one of those fundamentally-sound projects that continued to build throughout the bear market and that are now sitting inside long-term accumulation zones. As we can see, it has now spent 205 days inside a range between 3,100 satoshis and 5,000 satoshis, poking above range resistance briefly in December 2019 before coming back inside the range. I have been building a long-term position here, with an average entry of about 4,100 satoshis now. I will be holding this one for an entire cycle if I can.
And that concludes this week’s Market Outlook.
I hope you’ve found some value in the read.
Feel free to leave any comments or questions below!