Market Outlook #79 (1st June 2020)
Hello, and welcome to the 5th instalment of my premium Market Outlook and the 79th overall.
In this week’s post, I’ll be covering Bitcoin, Ethereum, NEO, TRON, Zilliqa, Ark and NKN, plus I’ll be providing a thorough analysis of Altcoin Market Cap.
As ever, if you have any suggestions for next week’s post, feel free to leave them in the comments below.
As usual, there is plenty to get through for this post, so let’s crack on:
Bitcoin:
Weekly:
Daily:
Price: $9562
Market Cap: $176.244bn
Thoughts: Well, despite another week passing by, Bitcoin remains coiled inside a tightening range.
Beginning with the weekly chart, we can clearly see the weekly range between $8100 and $10100 that formed around a month ago, with price having remained inside that range since. Moreover, the ranges have been contracting with each successive week. You will recall that a couple of weeks ago I was expecting a dump towards the bottom end of the range at $8160, given the inside week failure pattern that formed, but I also mentioned that my invalidation for this was $9470. Given that we reclaimed that level last week, I no longer think that this scenario is valid, as we also took out the prior weekly low (more clearly seen on the daily chart) at $8700 before reversing and closing the week up above $9500. As such, I am now simply viewing this as one larger consolidation beneath resistance; one that I am expecting to resolve to the upside.
Looking at the daily chart, there is clear short-term trendline resistance that has formed over recent weeks, with each high lower than the previous. We also printed a higher-low last week at $8585, above the $8100 range low from a couple of weeks prior. This contracting range has been occurring on decreasing volume, as such patterns often do, with the current tussle being with the old weekly high at $9470, which I have repeatedly mentioned as an important line in the sand. The fact that we are now forming a mini-consolidation below short-term trendline resistance – a fractal of the weekly pattern unfolding – makes me think that we will see an upside breakout soon, but I doubt it will be as easy as that. We may get another dump into the 360-day moving average before the pattern resolves, but I am expecting $10100 to be retested soon. If price is able to close above $10100, a move into the double-top at $10600 should swiftly follow. Close and hold above that and it is clear skies and I believe the macro bull run is underway.
However, this is by no means guaranteed. Despite the consolidation pattern unfolding, we may well still be making a lower-high on the weekly. My invalidation for the bullish scenario would be a daily close below $8100, with a more aggressive flip to short possible on a close below $8585.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $237.94 (0.02483 BTC)
Market Cap: $26.456bn (2,759,455 BTC)
Thoughts: Ethereum is leading the charge somewhat as it has broken out of consolidation before BTC/USD, driven by rallies in ETH/BTC.
Beginning with ETH/USD on the weekly, we can clearly see a strong weekly close above the prior high at $228, with price rejecting at the 200-week moving average. Volume has been declining since the earlier stages of the rally, which isn’t a good sign for bulls, particularly coming into multi-month trendline resistance. That said, if the weekly is able to press up above the 200WMA and thus trendline resistance, I think plenty more volume will come in as price retests the lower-high at $290. Close above $290 and I’d be looking for longs all the way into $370 – any movement beyond that level on good volume would spark serious FOMO.
Now, looking at the daily for the dollar pair, we can see that price closed firmly above that high at $228 that I was so keenly watching, with consolidation occurring above the high. Price didn’t quite reach the pre-capitulation swing-high at $254 before rejecting but I am now looking for a move into that high over the coming days. It is at that point that I will be paying most attention, as there are two possible scenarios that make for high R plays; either we see a breakdown at the trendline resistance after taking out $254, which I would look to get short on, or we close above the confluence of levels and rally into $290.
Turning to ETH/BTC, we can see that there is trendline resistance pressing right up against price at the moment. There is also a lower-high at 0.0261 overhead, which will act as resistance. More importantly, however, price closed firmly above the bottom end of the pivot zone and is now looking to do the same above 0.0245. As I have mentioned on multiple occasions, this is my bull/bear line, and whilst we are above it I would expect to see bulls in control.
Turning to the daily for the pair, there is a clear breakout above trendline resistance on this timeframe and the 200DMA looks to be crossing over the 360DMA from below for the first time in over a year. I have marked out the area I was discussing last week at 0.023, which, as we can see, preceded a swift move up as soon as it was reclaimed. If we start to see a similar consolidation here, I’d expect to see another leg up above 0.0261. If we fall here and close back under 0.0245, I’d be looking for a retest of the consolidation at 0.023 before price decides on a direction. I am, however, leaning bullish here, as trendline resistance is failing to be respected.
NEO:
NEO/USD
Weekly:
Daily:
NEO/BTC
Weekly:
Daily:
Price: $12.40 (0.00129 BTC)
Market Cap: $874.942mn (91,271 BTC)
Thoughts: NEO has been very similar in its movements to many majors, with the weekly for NEO/USD clearly showing capitulation in March, leading to new lows below the November 2018 low at $5.20. Price also swept the July 2017 low, which was NEO’s initial trading week on Binance. Since that sweep, NEO has reversed like the rest of the market but remains below its 2020 highs at $16.87, with prior resistance looming overhead at $13.86. Turning to the daily, we can see a reclamation of the 200DMA and 360DMA and pre-capitulation support at $10.25. I’d expect to see a move up from here into that resistance at $13.86. Above that and I think we move for that higher-high at $17. Beyond that, I am looking at $24.56 as major resistance. However, if price loses the confluence of levels at $10.25, I’d expect a retest of $6.50 as support.
The NEO/BTC chart is more attractive, with a clear breakout above multi-year trendline resistance in November 2019. Price then consolidated between 0.00115 and 0.00155 for several weeks, before losing range support and falling to new support at 0.001. Since then, price has rallied back above prior range support and I am keenly watching for a weekly close above this level. On the daily, you can see the trajectory I am expecting over the coming days, with short-term trendline support now in place and price having reclaimed the 200DMA and 360DMA. There is also a clear break in market structure to the upside, with price having broken and closed above 0.0012. I am looking at 0.00153 as a short-term upside target.
TRON:
TRX/USD
Weekly:
Daily:
TRX/BTC
Weekly:
Daily:
Price: $0.016 (172 satoshis)
Market Cap: $1.1bn (114,861 BTC)
Thoughts: TRON is universally hated by crypto-lovers, but ignoring its sketchy fundamentals, there is plenty to like about the chart itself.
Looking at TRX/USD, we can see strong trendline resistance overhead, with price having capitulated like everything else in March, sweeping the 2018 low at $0.01 into $0.0064. I am expecting a move into that trendline resistance at the very least, with the daily chart showing the 360DMA even closer to current price and likely to act as serious resistance. Price is also currently below the prior weekly high at $0.0177 and until we get a close above that level I am not looking for any short-term longs.
Turning to TRX/BTC, this is the chart I am more excited by. The weekly depicts a 295-day range between 138 satoshis and 260 satoshis, with decent consistent volume here. Price is currently at the lower end of the range, thus providing the best possible risk/reward for spot positions. On the daily, we can see trendline resistance from February pressing up against price at the moment, with the 200 and 360DMA overhead; I would expect a swift move to the top end of the range if we get a breakout here. For a leveraged position, I am waiting for a clear break above range resistance before I get involved.
Zilliqa:
ZIL/USD
Weekly:
Daily:
ZIL/BTC
Weekly:
Daily:
Price: $0.0174 (181 satoshis)
Market Cap: $176.821m (18,459 BTC)
Thoughts: As I’m sure you’re aware, I have been actively mentioning Zilliqa since it was below the 200-day moving average a few couple of months ago, having entered a position with an average entry below 70 satoshis.
Price has continued to move as expected, with the rally out of the range now beginning to pick up steam with volume piling in. Price is well above the 360DMA now and has formed solid trendline support on its BTC pair, with resistance now coming in overhead at 200 satoshis. I have depicted a modest trajectory on the daily chart for ZIL/BTC – I say modest because this may well continue to ramp up if price is able to close above 200 satoshis. Nonetheless, I am expecting a test of major resistance at 350 satoshis before July. Turning to ZIL/USD, the only thing to add is that price firmly closed the weekly above the false breakout high at $0.0099 and the next major resistance is over 50% higher at $0.0287. If price is able to hold above the current minor resistance at $0.015, I think this is the next level it hits.
I will be looking to take some ZIL off the table at 350 satoshis, but I am going to be holding the majority for many months.
Ark:
ARK/BTC
Weekly:
Daily:
Price: $0.227 (2,372 satoshis)
Market Cap: $27.57mn (2,878 BTC)
Thoughts: Ark is another of the midcaps from 17/18 that we destroyed over the past couple of years but continued to build.
With solid fundamentals, there is not much for me to say here except that I am very much happy to pay all-time low prices for a project that has spent the past few years developing and building out a userbase. On a technical level, we can clearly see the near 300-day range at all-time low, whilst price has been capped by the 360DMA. Recall similar price-action in Zilliqa and the price-action that has followed since price reclaimed that moving average. I am expecting similar movements for Ark once this important level has been reclaimed as support. My first target is 7700 satoshis, followed by 19k satoshis. Plenty to look forward to from this one, I think!
NKN:
NKN/BTC
Weekly:
Daily:
Price: $0.0185 (193 satoshis)
Market Cap: $8.65mn (902.7 BTC)
Thoughts: NKN is one of the altcoin I am most bullish about for the rest of the year, with no bull cycle having ever played out despite the rock-solid fundamentals of the project.
The weekly shows the brutality of the bear market since its inception, with the all-time low only having been printed earlier this year, but with price now being tightly range-bound with plenty of volume coming in. The daily is much clearer, of course, with the all-time low at 147 satoshis acting as range support, with the 200DMA acting as long-term resistance. As you can see, there have been three prominent accumulation spikes over the past year. As such, I have been buying this year with my most recent buys at 160-170 satoshis. I am looking to hold cyclically, particularly given the lack of bull cycles in its history, but the first indicator that such a cycle is beginning will be a move above the 200 and 360DMAs.
Altcoin Market Cap
ALT/BTC
Weekly:
Daily:
Market Cap: $94.19bn (9.84mn BTC)
Thoughts: Altcoin Market Cap, priced in BTC, is the aggregate market valuation of all altcoins in the space, and thus is highly significant for my trading. It can also be viewed as the inverse of the Bitcoin Dominance indicator. The several historical altcoin market cycles are all clearly visible on this chart. So, I figured it would be helpful to take a look at this here and put into context what we are currently seeing with alts.
Beginning with the weekly, although it looks a tad busy, everything is there for a reason. Firstly, I have marked out the trendline support that has been in play for the entire history of the altcoin market, which is now potentially acting as resistance. You can also see the reclaimed trendline resistance that became support briefly in 2017 before capping the altcoin action in January 2020. The final trendline you can see is trendline resistance from the all-time high in January 2018.
Now, as we can see, the altcoin market experienced a protracted bear market until Q3 2019, printing a low at 7.1mn BTC. The market then rallied for months all the way into that reclaimed trendline resistance at 11.5mn BTC, shy of the 200WMA, before rejecting a falling to new lows during March capitulation. This sweep of the 2019 low was swiftly reversed and alts have now been rallying for weeks, pressing right up against the most important trendline as potential resistance as I type this. If alts reject here, the market will likely dump all the way back to 6.7mn BTC, which would be ~30% off the majors at least vs BTC. However, if this trendline is reclaimed as support, I’d expect a retest of 11.5mn BTC; above that and trendline resistance from the all-time high will come into view, along with the 200WMA. That is still a good 40% rally away. If we do get that far, I’d expect a lot of FOMO into alts and a sustained bull cycle, potentially into new all-time highs, but there is a lot of resistance to overcome. Turning to the daily chart, there isn’t too much to add, but we can see that short-term trendline support has been reclaimed, with short-term trendline resistance right overhead. The market has also overcome the 360DMA and 200DMA. I am now looking for a breakout that leads to a retest of 11.6mn BTC.
And that concludes this week’s Market Outlook.
I hope you’ve found some value in the read and thank you for supporting my work!
As ever, feel free to leave any comments or questions below, or email me directly at nik@altcointradershandbook.com.
