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Market Outlook #76

CoinMarketManager


Market Outlook #76 (11th May 2020)

Hello subscribers, and welcome to the second instalment of my premium Market Outlook and the 76th overall.

I’d like to thank you all of you early subscribers for the vote of confidence in my premium material; and from the feedback I’ve received it would appear that there is a great deal of value here, which I’m very happy to hear.

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, Tezos, Cardano, Monero, DASH, Algorand, TomoChain and Metal.

As I mentioned in the first premium Market Outlook, there are a lot of charts and analyses to read through here so you may want to grab a coffee or five.

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.

Oh, and I’ll also be publishing an analysis of Altcoin Market Cap and Bitcoin Dominance as a separate post this weekend, as well as emailing over a poll for the first exclusive Coin Report, selected by you!

If you have any suggestions for future Market Outlook inclusions, feel free to leave a comment or drop me a message privately or via email.

Let’s crack on:

Bitcoin:

Weekly:

BTCUSDWeekly

Daily:

BTCUSDDaily

Price: $8880

Market Cap: $163.721bn

Thoughts: Beginning with the Weekly chart for BTC/USD, readers of last week’s Market Outlook will recall that I was expecting further upside following a strong close on Sunday, though my expectations were ultimately not met as price failed to clear the $10,550 double top before rejecting, with last night’s close printing rather bearish. Volume was also greater than the week before, confirming the validity of the rejection as we come into the halvening event today. The traditional ‘sell on news’ was even front run, much like the $10,550 highs were. That said, if we look at price-action in March – April 2019, a similar pattern of expansion followed by consolidation and bearish rejection formed, followed by further upside. That isn’t to say that the same will occur again, but with the halvening sell-off having been front-run and the clean double-top still in play, upside post-halvening does make sense from a liquidity search perspective. Ultimately, what I am looking for is either a close this week below $8100 to confirm that the bears are in control and that we will likely be retesting the yearly open at $7165 and probably even the support at $6400, or a close back above the trendline resistance.

More clarity can be found on the Daily chart, where 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

Weekly:

ETHUSDWeekly

Daily:

ETHUSDDaily

ETH/BTC

Weekly:

ETHBTCWeekly

Daily:

ETHBTCDaily

Price: $188.79 (0.02119 BTC)

Market Cap: $20.918bn (2,356,014 BTC)

Thoughts: Beginning with ETH/USD on the Weekly timeframe, we can see that the initial signs of a lower-high are forming, although there is nothing concrete here yet. If we close this week out below last week’s low, that would be my confirmation that the tide has turned and we will likely be moving back towards the support at $116, where the capitulation of March failed to close below. Beyond that, there isn’t much else to add on this timeframe in addition to that which I discussed in last week’s post, which is simply that I still expect the $80 low to hold as a cyclical low.

Turning to the Daily chart, here I have provided much more 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.

Looking at ETH/BTC, readers will remember that my two most important levels for the pair are 0.023 and 0.0245 and the zone between them appears to me to be a pivot between bears and bulls. I mentioned that whilst we were above those levels, I expected higher prices but those levels fell just this past week. Bears regained control rather easily and the retest of 0.02 that I mentioned came much faster than I would have expected. We are hovering above that higher-low at the moment, and if we fail to hold above it I think it is going to spell a lot of trouble for Ethereum and large-cap alts en masse, as I’d expect a move back towards the range low at 0.016.

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

Weekly:

XRPUSDWeekly

Daily:

XRPUSDDaily

XRP/BTC

Weekly:

XRPUSDDaily

Daily:

XRPBTCDaily

Price: $0.195 (2205 satoshis)

Market Cap: $8.629bn (972,515 BTC)

Thoughts: XRP was looking very decent indeed for spot position last week, as I mentioned, having scooped some up around 2400 satoshis. I also mentioned that my stop would be on a Weekly close below 2250, which we are currently trading below and my spot position is about 8% underwater. That said, there is an entire week to go and, looking at the chart, I would not be surprised to see a close back above the level, but we shall come to the Bitcoin pair shortly.

Beginning with XRP/USD, we can see that price is still trading above support at $0.175, which had been supporting price prior to March capitulation. That said, we are also now looking at another potential lower-high in a series of such lower-highs since January 2018. This has been a very protracted bear market for the pair but the swing-failure of the 2017 range low during March’s capitulation did give me some confidence in a potential reversal from this area. If we do start close back below $0.175, I would expect a retest of the range low at the least, given that this is the only support visible on the chart.

Turning to the Daily chart, 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 XRP/BTC on the Weekly, as I mentioned last week, the reasoning behind me buying some spot at 2400 satoshis was the low-risk, high-reward setup of buying range support within a 300+ day range at historical support levels (the pre-2018 cycle low). As such, I do still think this range will hold, but if it does not I will be exiting my spot position and looking for the pattern illustrated on the chart; that is, a move back into the next area of support at 1500 satoshis followed by a reclamation of 2250 satoshis as support – at that point, I would re-enter spot positions.

Looking at the Daily, 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.


Tezos:

XTZ/USD

Weekly:

XTZUSDWeekly

Daily:

XTZUSDDaily

XTZ/BTC

Weekly:

XTZBTCWeekly

Daily:

XTZBTCDaily

Price: $2.43 (28,134 satoshis)

Market Cap: $1.725bn (199,768 BTC)

Thoughts: Last week, I mentioned that there were two scenarios I was watching out for with XTZ/USD, in particular, for leveraged positions. Unfortunately, despite getting the breakdown I was looking for to potentially get short, Tezos failed to close at the lows, invalidating our setup.

Beginning with XTZ/USD, it is very early to suggest but there is some indication that this current lower high at $3.05 could be a complacency shoulder following possible euphoria at $3.95. I think it is highly unlikely but we have to look at all possibilities; if this is complacency, where would price then start to move for? Well, I’d expect a breakdown below the old triple-top at $1.95 to lead to a retest of the capitulation lows, followed by the October 2019 lows at $0.75. If this is not complacency, I’d expect $1.95 to hold as support and a strong bounce to follow.

Turning to the Daily, we can see the $2.51 level that I was looking at for a potential short on a close below the level, confirming a breakdown. Instead, price printed a false break at the pre-capitulation support and is now trading inside the range of the previous day. This is a no-trade zone for me.

Looking at XTZ/BTC, we see a similar pattern to that of the Dollar pair, as mentioned in the previous week’s post. That said, whilst we remain above support at 24,000 satoshis (and the levels marked out above it) I remain bullish on Tezos. I will be a buyer as close to 24k satoshis as possible. I think we see continuation if we bounce there to new all-time highs, but that is likely largely dependent on whether Bitcoin begins to shit the bed or holds up…


Cardano:

ADA/USD

Weekly:

ADAUSDWeekly

Daily:

ADAUSDDaily

ADA/BTC

Weekly:

ADABTCWeekly

Daily:

ADABTCDaily

Price: $0.047 (548 satoshis)

Market Cap: $1.22bn (141,955 BTC)

Thoughts: Cardano is actually holding up a little better than other similarly-sized alts at the moment, with its BTC pair holding above some important levels for now.

Beginning with ADA/USD, we can see from the Weekly chart that there has been a series of lower-highs and lower-lows since inception in late 2017. Price set a low in late 2018 at $0.0265, rallying from there to resistance at $0.11, but price was unable to crack this level, falling for months back to the area of support above $0.0265 before printing a lower-high earlier this year at $0.077. Subsequently, we got capitulation in March, but interestingly price was unable to close below the 2018 lows, having now rallied for several weeks fuelled by BTC/USD; that rally does appear to be stalling now, with the high of $0.0577 holding for a couple of weeks now and price beginning to turn. I am more concerned long-term with the fact that we failed to close below that important support, which was also the all-time low at the time. I do think if BTC turns lower we get a retest of $0.0265, which would make a great low-leveraged cyclical long. On the Daily chart, I have highlighted the next area of support that I expect price to test if alts begin their next leg down, as other alts are appearing to (Cardano is not immune to this in any way), but its failure to break market structure where other largecaps have shows some underlying strength here relative to its peers.

Turning to ADA/BTC, we can see the clear 280-day range that has formed between 380 satoshis (the all-time low) and resistance at 689 satoshis. The clearest play here is to wait for a breakout above the range resistance and get long on the retest, which, from the Daily chart, we can also see would print a series of higher-lows and higher-highs from the March lows. Spot buyers, like myself, are happy to buy inside this range, with the significant volume being traded in such a tight price range being a classical sign of a cycle bottom. Invalidation is below the range support, of course.


Monero:

XMR/USD

Weekly:

XMRUSDWeekly

Daily:

XMRUSDDaily

XMR/BTC

Weekly:

XMRBTCWeekly

Daily:

XMRBTCDaily

Price: $58.15 (0.00675 BTC)

Market Cap: $1.02bn (118,588 BTC)

Thoughts: Monero has followed suit with other largecaps and taken a tumble towards long-term support on its Bitcoin pair.

If we take a look at XMR/USD to start with, the Weekly shows a false breakout above multi-year trendline resistance earlier this year, printing new resistance just shy of $100. This preceded the March capitulation and price fell swiftly below the November 2018 lows at $37, though it failed to close below the level. A new low did form at $26, but the reversal, as with most alts, was swift, as BTC dragged the dollar valuations up. But now we see price pushing up against $70 and failing and the Daily reveals a false break below the prior swing-low, despite the strong rejection from resistance. Price did failed to move below the capitulation high at $54 but I’d expect any move below this to confirm a break in market structure and open up much more downside, with $43.50 my next area of interest.

If we turn to XMR/BTC, I have provided the trajectory that I am waiting for before I re-enter any Monero positions. As the Weekly depicts, price has found a base at old resistance turned support and the cyclical low pre-2017. For spot buying, this range is great, for similar reasons to those of XRP or Cardano, with tight stops available on a close below range support. For leveraged positions, however, I would wait for a clean break and retest of 0.0095. If we do start to move lower, however, there is very little support below 0.0046…


Dash:

DASH/USD

Weekly:

DASHUSDWeekly

Daily:

DASHUSDDaily

DASH/BTC

Weekly:

DASHBTCWeekly

Daily:

DASHBTCDaily

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.

Turning to DASH/BTC, we can see from the Weekly that trendline resistance has been capping price since 2018, with each test forming a lower-high in the downtrend. There is no reason to believe the most recent test was different, particularly given the reaction since, and so I am uninterested in holding DASH until this situation changes. If we start to see a break above trendline resistance for the first time in years, I’ll start to look for opportunities to enter spot positions. For now, it is just a series of lower-highs and lower-lows with no range or base having formed.

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.


Algorand:

ALGO/USD

Weekly:

ALGOUSDWeekly

Daily:

ALGOUSDDaily

ALGO/BTC

Weekly:

ALGOBTCWeekly

Daily:

ALGOBTCDaily

Price: $0.185 (2169 satoshis)

Market Cap: $130.44mn (15,333 BTC)

Thoughts: Algorand is another one of those perpetually cursed coins since its inception, having spent the entirety of its existence in a downtrend or a range. That is, until it isn’t. Whilst the time is not right to be getting into speculative leveraged positions in midcaps, it does appear to be the time for spot buying of such coins.

If we look at ALGO/USD firstly, we can see this series of lower-highs and lower-highs, with the all-time low having formed at $0.162 in September 2019 before price broke to new lows in March 2020 at $0.093. The Daily provides much more clarity, with clean textbook support and resistance levels having formed, the first of which is the resistance at $0.92, followed by support turned resistance in February this year at $0.50. More importantly, we see a long-term range between the prior all-time low and $0.30, above which price poked its head briefly earlier this year before capitulation led price to break those very lows. The rebound since has been mild, although range support was reclaimed, but price remains below the 200-day moving average.

Turning to ALGO/BTC, I have highlighted the 250-day range with support at 2100 satoshis and resistance at 4900 resistance and that is what I believe is the accumulation range prior to the next cycle. The fact that price failed to capitulate on the BTC pair during the March madness suggests to me that these lows will likely hold, though this is by no means a guarantee; it is however a high-reward, low-risk opportunity to buy spot, with a soft stop on a Weekly close below 1900 satoshis.


TomoChain:

TOMO/USD

Weekly:

TOMOUSDWeekly

TOMO/BTC

Weekly:

TOMOBTCWeekly

Daily:

TOMOBTCDaily

Price: $0.366 (4305 satoshis)

Market Cap: $25.87mn (3,041 BTC)

Thoughts: TomoChain is a low-cap project that I’ve had my eye on for a while, particularly since it had a derivative listed on FTX (one of the smaller projects with a futures contract).

But today I am interested in spot positions. Why? Well, looking at the TOMO/USD chart (there is only a Weekly as the USD pair is largely irrelevant for such purposes, but something interesting is unfolding) we can see a fractal of price-action repeating similar to that of late 2018, which I have marked out for you. Price forms a base, rallies to a high, breaks a new low, forms a lower high, consolidated and forms a higher low and then rallies for several weeks. The first four stages are playing out very similarly here and though fractals are by no means a sure thing, they are worth keeping an eye on.

Turning to TOMO/BTC, we can see that the all-time high was formed shortly after listing at 0.00024, before price fell for months, finding its all-time low in August 2018 at 2850 satoshis; a low that remains firm to this day. Price then experienced a full bull cycle but printed a lower-high at 17,117 satoshis before falling off once again, but TOMO found a base above the ATL and consolidated there for weeks. In 2020, we saw a brief spike up to resistance at 10k satoshis, but this did not last and price has since returned once again to the range above the all-time low. I am buying spot here with a tight stop on a Weekly close below the all-time low. My aim is to hold for a cycle, potentially retesting 17k satoshis and, given sufficient macro conditions, the all-time high.


Metal:

MTL/BTC

Weekly:

MTLBTCWeekly

Daily:

MTLBTCDaily

Price: $0.27 (3,171 satoshis)

Market Cap: $17.667mn (2,077 BTC)

Thoughts: As Metal is not traded as a derivative, I am solely concerned with its BTC pairing at the moment, which provided sufficient insight for spot plays.

Beginning with the Weekly, I have highlighted a near-300-day range that has formed above the all-time low at 2370 satoshis, with range resistance at prior support of 5860 satoshis. Most importantly, we can see that the entirety of MTL’s price-history has been effectively spent in a long-term downtrend, meaning that there has been no significant bull cycle yet.

Turning to the Daily, I have highlighted the prior support turned resistance at 5860 satoshis, as well as the range support at 2230 satoshis. Given that we are currently sitting a little higher than range support, I am a buyer of spot here for a potentially long-term position, with a view to hold for a full cycle. More risk-averse speculators might consider waiting for a move above range resistance at 4340 satoshis before entering any positions. My cyclical bottom thesis would be invalidated on a Weekly close below 2200 satoshis.

And that concludes this second premium instalment of the Market Outlook.

I hope you’ve found sufficient value in the read – if you have any comments or questions, feel free to leave them below.

Also, please keep an eye out for the poll that will be coming your way for the exclusive Coin Report, as well the post I will be publishing this weekend on Bitcoin Dominance.


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This Post Has 2 Comments

  1. Julia Collins

    Thanks for the great analysis as always, Nik. I would also love to hear your subjective, personal opinion on the projects more. What small-cap cryptos are you most excited about right now? -Julia

    1. Nik

      Hey Julia, no problem at all!

      At the moment, I’m really liking the look of DAG, COTI, LCX, TRB, MUE, NKN and ZIL.

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