Market Outlook #84 (13th July 2020)
Hello, and welcome to the free edition of the 84th Market Outlook!
In this week’s post, I will be covering Bitcoin, Ethereum and Cardano.
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Market Cap: $170.613bn
Thoughts: Another two weeks have gone by and the eternal range remains just that; eternal.
As we can see from the weekly chart for BTC/USD, there is very little of note to discuss beyond the fact that volume continues to decline whilst price remains range-bound below triple-top resistance at $10,600. The weekly ranges remain very tight, albeit with a first green candle closing last week after four straight reds. I would not personally read too much into this; as I have been saying for the entirety of this range, wait for the market to tell us where it wants to go rather than pre-empting it, particularly whilst these conditions are proving fruitful for other trades (altcoins).
Turning to the daily, we can see recent movements more clearly, but the degree of chop is plain to see for all. We had short-term trendline resistance capping price and trendline resistance turned support from back in May supporting price, converging and looking ready for a breakout in one direction or the other. Instead, we got a weak breakout below support but into the 360-day moving average, which remains firm, followed by a move back up and above short-term trendline resistance. In effect, there is no indication of direction at the moment, so don’t be a hero. Whilst this range remains in play, altcoins will continue to make more sense to trade than this monstrosity, particularly on declining volume. To reiterate that which I have mentioned in prior posts, we are looking for clean, high-volume breakouts either below the 360dMA and 200dMA or above $10,600 to start looking for full risk positions.
Price: $243.18 (0.02626 BTC)
Market Cap: $27.172bn (2,934,305 BTC)
Thoughts: Ethereum is enjoying the combination of the DeFi narrative and the lack of volatility in BTC/USD, but the Dollar pair remains stubbornly capped by significant overhead resistance.
Beginning with ETH/USD, we can see on the weekly that trendline resistance continues to suppress price, as does the 200wMA and the resistance at $253. That said, price does appear to have found new support at $217, forming a swing-low at the level and following through with a strong close at resistance last week. Volume continues to decline, just like Bitcoin. Now, looking at the daily, the range between $217 as support and $253 as resistance remains in play, but price is now looking to retest $253 for the 5th time. I do think it’ll be ETH/BTC that drives the Dollar pair up above resistance, as opposed to BTC/USD, and I am expecting a breakout to occur above that level. As I have mentioned previously, close above it and I will be looking for $290 and above; reject and close back below and I think that will be the perfect opportunity to short.
Turning to ETH/BTC, unlike the Dollar pair, trendline resistance on the weekly has clearly become support and formed the base for the bounce we saw last week, with price closing out the week a fraction higher than the previous weekly high at 0.02622. Volume also broke out recently from its downtrend, making me believe that ETH/BTC is currently the leading indicator for the market, with last week’s strong close looking like a precursor for a retest of the yearly high at 0.0286. Get above that and the party will really take off, with the next major resistance at 0.0417. Now, looking at the daily, we can see that the 0.0262 level is now failing to act as resistance, despite having capped price for weeks, with the short-term range resistance at 0.0256 now acting as support, along with trendline support from earlier this month. I think we are well on course for a move higher into that 0.0286 area. Invalidation would come on a break of the local trendline support and a move back below 0.0256.
Price: $0.133 (1435 satoshis)
Market Cap: $3.446bn (372,076 BTC)
Thoughts: Cardano surpassed the expectations I outlined in my previous Market Outlook and it doesn’t quite look finished.
Beginning with ADA/USD, we can see that price has now closed firmly above the June 2019 high at $0.116 on the weekly timeframe and on significant volume; in fact, it was the highest weekly volume in ADA’s history on Binance. Trendline support continues to be respected and the next area of significant resistance is at $0.20. Turning to the daily, we can more clearly see the strength of the trend, with price now using that previous high at $0.11 as support for the next leg up. If we get a close above $0.14 on the daily, I’d expect the rally to continue on towards that $0.20 area.
Turning to ADA/BTC, we can now very clearly picture the accumulation range that was traded between September and May that preceded the breakout in June this year. One thing I’d like to mention here is just how textbook this is as a bottoming formation in altcoins, and it is one we can see on many, many altcoins at present, most of which remain within that accumulation range. Now, as price has traded out of the range and has blasted through ~1100-satoshi resistance, the next important area is at 1850-1950 satoshis; the 2019 high. If I see a weekly close above that level, I think we are going to see price rally another 100% from there into 4k satoshis, to be hones, as there is no real resistance at all between the levels.
And that concludes this week’s free Market Outlook.
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