Market Outlook #76 (11th May 2020 – Free Edition)
Hello, hello and welcome to the 76th Market Outlook.
We come upon the much-anticipated halvening event for Bitcoin, expected to occur today and likely having already occurred by the publication of this post. I’m sure we’re all expecting plenty of volatility today, but it’s the trajectory post-halving that is the most exciting, despite the possibility of some downside risk in the immediate future. Despite this short-term possibility, I am very much bullish on the next four years of Bitcoin’s existence.
In this week’s post, I’ll be covering Bitcoin, Ethereum, XRP and Dash.
One thing to note is that this is being written on the day of the Bitcoin halvening, thus there is a great deal of volatility in the intraday price-action and so the prices in the charts may not be exactly those at the time of publication. Nonetheless, we are not concerned with today’s volatility but rather the expectations for the weeks ahead.
Let’s crack on:
Bitcoin:
Price: $8880
Market Cap: $163.721bn
Thoughts: Looking at the Daily chart, we can see how the false breakout above trendline resistance both ran the stops above the prior weekly high at $9480 and trapped new longs on the retest of that very level (coinciding with a trendline retest, to boot), as price did not bounce there at all. Instead, that was the high of the day and price fell all the way to $8100. Ask yourself who is feeling the pain here, short-term? For me, it is the longs above $9480. Where will they look to exit their underwater positions? At break-even, if they can get it, so expect sell pressure to come in on a retest from below of that level as resistance. As we can see from the chart, price did find support at the 200DMA, which had confluence with the capitulation day high, and closed out the day around the 360DMA. I have provided two possible scenarios to look at for short-term trades. The first of these is a long setup based on a reclamation of $9480 as support with a target of those highs at $10,550. For a bearish setup, I’d be looking for a retest and breakdown from the $9480 level, ideally shorting at the pivot ~$9080, looking for new lows. Outside of those two setups, there’s nothing I’m looking at for leveraged positions in BTC right now.
Ethereum:
ETH/USD
ETH/BTC
Price: $188.79 (0.02119 BTC)
Market Cap: $20.918bn (2,356,014 BTC)
Thoughts: Looking at the Daily chart for ETH/USD, here I have provided some detail on recent movements, primarily based on the clear break in market structure to the downside last week on the move below $195. The close below this level confirmed a series of lower-lows and lower-highs, and whilst price remains below this level I would expect lower prices, with a move back to the yearly open at $156 very much possible. If we do start to see price push back above the level, I would then look for a higher-high to form, reverting market structure to bullish, before looking for any longs. Such a move would also take us above the important pivot at $228, which would likely lead to a swift retest of the high at $290.
If we look at ETH/BTC on the Daily, we can see a clear rejection at the prior support turned resistance at 0.023, which is a particularly ugly candle. Price is currently consolidating between the two moving averages (200-day and 360-day) and the rejection does make me think that we see a move below 0.02 briefly in order to trigger some stops, perhaps followed by a reclamation of the level and a swift reversal. A move back above 0.023 would invalidate this bearish scenario and I’d be looking for longs to take out the clean triple top at 0.026.
XRP:
XRP/USD
XRP/BTC
Price: $0.195 (2205 satoshis)
Market Cap: $8.629bn (972,515 BTC)
Thoughts: Beginning with XRP/USD, I am particularly interested in the highlighted area from which market structure has recently broken and turned bearish. This break and turn occurred from an important area also: the 200-day moving average. If we start to see price reject from a retest of the underside of this area, I am expecting a swift move below $0.175 and then a retest of the range low at $0.125. Break back above it and I will look for longs, ideally with price closing above the 200DMA and then retesting it as support.
Turning to the Daily for XRP/BTC, I have highlighted the range support at 2250 followed by the breakdown and retest as resistance, which doesn’t look particularly great. If we start to close below 2000 satoshis I would be less confident in a move back above range support this week, with a 300-day range having failed to provide a base for reversal. I wouldn’t be taking any leveraged positions at all until at least the pivot and 200DMA was reclaimed at 2880 satoshis.
Dash:
DASH/USD
DASH/BTC
Price: $68.90 (0.00807 BTC)
Market Cap: $653.73mn (76,629 BTC)
Thoughts: Dash appears to me to be very similar to Monero in its price-action, having set a low in Q4 2019 at $36, well above the prior resistance from 2014 at $17. The protracted bear market visible on the Dollar pair is also very similar to other large-caps, but the Daily chart for DASH/USD looks a little more bearish. As can be seen on the chart, trendline resistance formed at $144 earlier this year and price fell off to new lows at $31 in March. The reversal was strong, but a similar fractal is playing out to that appearing on other coins – in short, BTC is currently running the show for dollar valuations on alts, not ALT/BTC pairs, and the rejection from the 360DMA and pivot at $93 has led to a rounded top forming, with price-action more advanced than some of its peers (note that others have not started to pull down in such a manner). $56 is the next level of support, followed by $37, and I am bearish DASH below $93. Reclaim that level and I think we break above trendline resistance.
The Daily for DASH/BTC depicts short-term trendline resistance and the recent break in market structure, printing a lower-low below 0.008. If we don’t begin to turn lower timeframe market structure bullish here, I would expect 0.0073 tot be retested as support, and a fall below that to lead to further capitulation to the 2019 lows at 0.0053. I am not interested in buying DASH anywhere near here, but if we print a higher-high above 0.0117, I would re-assess.
And that concludes this week’s free Market Outlook. I hope you’ve enjoyed the read!
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