Market Outlook #77 (18th May 2020)

Hello, hello and welcome to the 77th Market Outlook.

In this week’s post, I’ll be covering Bitcoin, Ethereum, Dogecoin and Decred.

There’s plenty to cover this week, particularly with BTC, which is in a very interesting spot at present; plus, there’s a textbook long-term setup in everyone’s favourite meme altcoin…

Let’s crack on:

Bitcoin:

Price: $9648

Market Cap: $178.446bn

Thoughts: The main thing I have my eye on is the inside week pattern that printed over the past week, with both the weekly high and low forming inside the range of the previous week. If you look at the Daily chart, you can see that today’s price-action wicked above last week’s high at $9970; if we fail to close above that level, one could reasonably expect the other side of the range to be taken out before any further upside, all the way down at $8160. In short, despite getting the trigger for further upside I discussed in previous posts based on the higher timeframe close above $9480 – and thus a reclamation of not only prior resistance as support but also the trendline resistance from June 2019 – the inside week formation and today’s price-action makes me hesitant to enter any longs just yet.

If we close back above $9970, either today or tomorrow, I would begin to look for longs, but the issue is that we would not know whether the inside week failure pattern is confirmed until the weekly close on Sunday night. If that candle closes below $9970, I’d expect the following week to be bearish with a move down to $8160; if it closes above $9970, I’d expect expansion to the upside. Until then, it’s primarily a case of sitting tight, although the reaction off the 200-day moving average and close back above trendline resistance does mean that I favour more upside over the coming weeks; the only question is whether inside week failure forms and leads to $8160 before any further upside…

Ethereum:

ETH/USD

ETH/BTC

Price: $212.26 (0.02191 BTC)

Market Cap: $23.608bn (2,431,825 BTC)

Thoughts: Ethereum is beginning to look a little better but I remain hesitant whilst it is pinned below key levels.

Beginning with ETH/USD on the Daily, it is here that I’d like to see a higher-high form above $228, as this would revert market structure to bullish and confirm for me that the dump into the 200-day moving average at $176 was a bear trap. I’ve highlighted my bullish scenario and bearish scenario, with a high probability long setup occurring on a clean break and retest of $228, looking for the pre-capitulation swing-high to be taken out right into that trendline resistance. This is where I would look to cover a long as there is no guarantee of further upside – after all, it could still be a series of lower-highs at that level. For a short setup, I’d wait for a rejection up here and a breakdown below the 200DMA, selling a retest of $176 and looking for the meat of the move down to retest $116 as support.

Turning to the Daily for ETH/BTC, we can see the tightening range unfolding this year, as a series of lower-highs forms with higher-lows. Last week, I pointed out the rejection at the 0.023 level as resistance, leading to a test of 0.02 as support, which for now seems to be holding. Today’s movements do appear to be taking us back above the 200DMA and 360DMA, but we need a close above 0.022 to confirm this. If we get that strong close, I’d expect another test of 0.023 and, if bulls can push through it and reclaim it as support, a move up to 0.0245. Only once price is cleanly above 0.0245 on good volume, however, would I expect significantly higher prices to follow; for now, we remain in a tightening range.

Dogecoin:

DOGE/BTC

Price: $0.0025 (26 satoshis)

Market Cap: $316.87mn (32,626 BTC)

Thoughts: As many of you can probably determine from a quick glance at the Weekly chart for DOGE/BTC, Dogecoin is the most perfect example of the movement between periods of fear and periods of greed of any cryptocurrency ever.

No other chart is necessary for me when analysing DOGE, as my trades are always long-term, looking to capture the bulk of a cycle. I am now thinking that the current 308-day range between 20-35 satoshis is the new accumulation range, with range support having formed at prior cyclical lows. This is also the longest range in DOGE/BTC’s history and the longest period (623 days) without a new cyclical peak. As such, I am a buyer here at 27 satoshis, looking for prices above 100 satoshis this year.

Decred:

DCR/USD

DCR/BTC

Price: $13.99 (0.00145 BTC)

Market Cap: $162.135mn (16,747 BTC)

Thoughts: I see a lot of discussion on Decred online, but having glanced at the chart I realised that there is nothing bullish about its price-action since early 2018.

Unlike many large or midcap alts that have found support and formed long-term ranges and bases, Decred has continually been printing lower-highs and lower-lows, extending its downtrend.

Looking at DCR/USD, we can see a clear downtrend from the series of lower-highs and lower-lows, with support turning resistance all the way down. Most significantly, March capitulation’s candle high at $15.93 is now acting as resistance, with the 200DMA overhead also, although some support has been found at the October 2019 low at $12. I am not interested in the pair whilst it is below its 200DMA.

Turning to DCR/BTC, the picture is equally bleak: where other alts have been able to form and hold solid ranges, Decred has fallen through its October support at 0.0015, with it now acting as resistance. In fact, there wasn’t really a range at all for DCR/BTC, as price just bounced in October, formed a lower-high at 0.003 and has been bleeding since. Whilst the support continues to be turned into resistance, I’d stay well clear…

And that concludes this week’s Market Outlook.

Feel free to leave any comments or questions below.

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