Market Outlook #83 (29th June 2020)
Hello, and welcome to the free edition of the 83rd Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum and Cardano.
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Market Cap: $167.04bn
Thoughts: In last week’s Market Outlook, I mentioned that I was expecting the short-term trendline resistance to be broken and for the inside week failure to play out, with price retesting $10,100, but we didn’t get resolution of the pattern. That said, I also mentioned that price remains in a no-trade zone for me, as recent weeks have been and as the current week also remains. It’s been a month since I last took a full risk trade in BTC/USD and that patient approach has, of course, been aided by the sporadic fireworks taking off in altcoins, at present.
So, looking at the weekly, we have an outside weekly candle that has printed, although the body of the candle remains very tight; this simply means indecision, and though smarter traders than I will argue back and forth whether this is a distribution top or re-accumulation beneath long-term resistance, I would prefer to let price tell me, as long as it takes for it to do so. Volume remains low and there isn’t much to discuss here on this timeframe whilst price remains between $8,100 and $10,600.
Turning to the daily, the lack of follow-through after the push up into short-term trendline resistance from earlier in the month was quite telling, with price falling off in subsequent days, albeit on declining volume, until yet another swing-failure was printed below last week’s low. Swing-failures, though a huge part of my trading system in legacy markets, are particularly devious in BTC/USD, and exceptionally so on timeframes below the weekly. Couple that with a range-bound market and I know better than to attempt to take longs or shorts on daily SFPs. That said, we can see that there is some sign of exhaustion occurring at the trendline resistance turned support with price now consolidation above the 360dMA and local support at $9k. I would absolutely not be surprised to see a breakdown here, despite the modest exhaustion signs, and I have marked out a possible trajectory into the $8k area that would sweep the May low and range support, as well as the 200dMA. My gut feeling is that we’d see a sharp bounce if we swing-failed that $8,090 low, and that is where I’d look for longs. If we do break down here, I would expect that range support to be tested, but if we actually close below the $8,090 level then I would look for intraday or intraweek shorts into the yearly open for a retest as support.
Now, that is the bearish scenario out of the way, but I am still leaning bullish whilst we have a clean triple-top in place. If we start to see price bounce here and break above the June trendline resistance, I’d expect a move all the way back to the top of the range, and, as I have mentioned before, I seriously doubt $10.1k-$10.6k will hold a fourth test as resistance. If we break above $10,600 and reject, I will be selling spot and likely getting short pending a suitable setup. Close above the level on solid volume and I think we see a lot of FOMO.
Price: $223.24 (0.02461 BTC)
Market Cap: $24.902bn (2,745,330 BTC)
Thoughts: Again, much like Bitcoin, there isn’t an awful lot to add to recent analysis other than the fact that price does appear a little top-heavy as it has rejected that 200-week MA three times now, but it is clearly holding up for now as volume remains low.
Looking at ETH/USD, from the weekly we can see this clearly, with the confluence of trendline resistance from June last year and the 200wMA proving a difficult task for Ethereum at the moment. We remain in consolidation around the previous weekly high at $228, with weekly ranges simply poking the trendline resistance above and the prior consolidation area as support below. Turning to the daily, we can see the consolidation range with clarity here, with the double-top at $217 acting as support and $253 significant resistance. If we close below $217 on volume, I’d expecting to see the confluence of the 360dMA and 200dMA to be retested at $191. This will very likely make a good spot for at least a short-term bounce, so I will be looking for long setups if we get down there. Same views on the top end of the range as last week for me, with any close above $253 opening up a path to $290 and likely much higher.
Turning to ETH/BTC, we see a very similar pattern of price-action here, with the sole discrepancy being that ETH/BTC is retesting trendline resistance as support as opposed to being capped by it, with price failing to move back below it for now. Volume also broke higher for the first time in months, although price rejected a move above 0.0256. If we look at the daily, this looks a little bearish as the top end of the range has been swept on slightly higher volume than usual and price has returned to range support. Breakdown here would open up a retest of 0.023 as support; if that failed to hold, I’d be looking for another consolidation to form around 0.021 before getting long, or a sweep of both swing-lows at 0.02 and a move back above the level.
Price: $0.083 (910 satoshis)
Market Cap: $2.14bn (235,960 BTC)
Thoughts: Cardano continues to look bullish, finding support in the area that I mentioned could form the new base a couple of weeks ago.
If we look at ADA/USD, that prior weekly high at $0.074 was a wick, with much of the price-action occurring at the $0.063 area instead for several weeks. It is precisely the latter level that price reacted from, with the weekly candle closing above $0.074 that week (and the subsequent week). Looking at the daily, trendline support has remained rock solid since March capitulation, and resistance continues to be turned to support. I am expecting continuation of the rally to follow, with $0.11 as the next area of trouble. This is invalidated by a breakdown below $0.074 and retest of the level as resistance, which would also break trendline support.
Turning to ADA/BTC, this looks even better than the Dollar pair, we price bouncing off the range breakout high at 694 satoshis. Looking at the daily, we can see the huge bounce that occurred earlier this month as price dumped into prior resistance, with the current pattern looking like a move above 950 satoshis is imminent. The next area of resistance is 1055 satoshis. If price fails to close above 950 satoshis on the next test, we’d likely see another sell-off and would have to look for fresh demand to come in to continue the rally.
And that concludes this week’s free Market Outlook.
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