Market Outlook #85 (20th July 2020)
Hello, and welcome to the 85th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, Tezos, Tron, Golem, Constellation and Troy. I will also be providing an update on Altcoin Market Cap, both in BTC valuation and in dollars.
As ever, if you have any suggestions for next week’s post, feel free to leave them in the comments below.
No surprises; there is plenty to cover, so grab a coffee and enjoy the read.
Market Cap: $169.111bn
Thoughts: I needn’t remind you of the eternal range and this point and I won’t waste your time in an attempt to dissect this useless chop.
As you can see from the weekly, price remains tightly wound in an ever-contracting range, with volume continuing to decline each week on BitMex. I mentioned in recent outlooks that I am not really interested in BTC/USD at the moment, as I am waiting for price to provide the trigger for a new trend. Instead, our focus should be on the fruitful conditions for alts. Turning briefly to the daily, we can see how minor supports, resistance and trendlines mean very little in this environment and anyone foolish enough to trade this is likely getting chewed up. We remain firmly above the 200dMA and 360dMA but weekly ranges are currently being capped by $9550. Break above that and we’ll probably go and retest $10k, but I’m not overly concerned whilst price remains inside the larger range between $8100 and $10,600. The meat of the move will likely come when either side of that gives way.
Price: $237.81 (0.02593 BTC)
Market Cap: $26.596bn (2,899,790 BTC)
Thoughts: Ethereum has had a muted week, much like Bitcoin, with not much to add to last week’s commentary for either pair.
Nonetheless, let’s take a look at ETH/USD: here, we can see on the weekly that price remains capped by the 200wMA, trendline resistance and horizontal resistance at $253. It also appears to be holding up above the prior weekly resistance around $228. Just as with BTC/USD, volume continues to decline. Turning to the daily, one thing of particular interest here is that we have a pretty clean quadruple top in the $250-254 region and whilst ETH/USD remains above $217 and ETH/BTC continues to look bullish, I am expecting those highs to be taken out. *Note: please ignore the three Trendline Resistance tags; clearly I must have copy-pasted them without realising.*
Now, looking at ETH/BTC, here we find more consolidation but above the key trendline resistance and right at the level of previous weekly high ~0.0261. Volume has also broken out of its downtrend since the breakout above the trendline and I am expecting a push up towards 0.0286 to follow soon, as long as BTC/USD remains range-bound and doesn’t spoil the party. The daily makes the consolidation more apparent, as we did get a clean breakout above the previous weekly high and have since come back off a little to test prior range resistance at 0.0256 as support. As I mentioned last week, as long as we remain above that level, I would expect bullish continuation; falter here and retest 0.0256 as resistance and we’ll likely retest the range support at 0.024.
Price: $2.86 (31,221 satoshis)
Market Cap: $2.11bn (230,093 BTC)
Thoughts: Tezos appears to be lagging behind Chainlink, the latter of which recently rocketed to new all-time highs.
Looking at XTZ/USD, we can see the range that has formed between $2.25 and $3.05, with price failing on two attempts to close the weekly above range resistance despite poking above. That said, last week was one of the first high-volume weeks for the pair since March/April and if Tezos can catch a little momentum this week I would very much expect the range resistance to give way. From the daily, we can see that price came and swept $2.25 into the 200dMA and bounced all the way to the top end of the range, where it did close above and has now come back inside. I think if it stays above the midpoint of the range and minor reclaimed support at $2.64, we’ll see bullish continuation out of the range towards the all-time high, but I do think this will be driven by the XTZ/BTC pair.
Looking at XTZ/BTC, we can see on the weekly that price broke out below the pennant that had formed, but, having taken out the low at 25,600 satoshis, price reversed hard, closed the week back inside the pennant and has since spiked up into the trendline resistance. I have marked out a trajectory that I wouldn’t be surprised to see play out; some sort of consolidation inside the pennant for a couple of weeks followed by a breakout above and continuation to 40k satoshis over the coming weeks.
Price: $0.0173 (188 satoshis)
Market Cap: $1.15bn (125,453 BTC)
Thoughts: Though I have provided the USD chart here for context, it is the TRX/BTC pair I am most concerned with and I have provided two setups that I have taken; one for a low leverage long and one as a spot buy.
If we look at the weekly chart for TRX/BTC, we can see that Tron has been range-bound for nearly a year and it appears to be lagging significantly behind other majors. As such, I am buying spot here with a stop-loss on a close below the range support at 125 satoshis, with an initial target of the June 2019 high at 488 satoshis. If we do see price break out above the range and test that level, I wouldn’t be surprised to see the resistance at 865 satoshis get tested too, albeit likely following a pull-back and consolidation.
Now, looking at the daily, we can see that price has closed above the 360dMA and 200dMA, with the latter now crossing above the former, which tends to be a good signal for cyclical reversals. Further, we can see that price broke above intra-range trendline resistance and then began a minor uptrend. As such, a low leveraged long makes sense here with a stop loss at 150 satoshis and a target of range resistance at 260 for a 1.75R risk/reward. Let’s see what the following weeks bring.
Price: $0.059 (650 satoshis)
Market Cap: $59.031mn (6,436 BTC)
Thoughts: Golem is one of the coins of the 2017 wave that I expect to still perform very well over the coming months, particularly if interest in crypto begins to pick up rather than stagnate and fall off.
As you can see from GNT/USD, price is approaching trendline resistance from the all-time high back in January 2018, although more imminent resistance can be found at $0.07, which has proven troublesome recently, as it preceded the mid-March capitulation. If we turn to the daily, however, we can see that price has closed above the 360dMA and retested it as support, now looking to move to retest that overhead resistance. If we see a break above trendline resistance, I would be looking for price to test $0.115 and then $0.174.
Turning to GNT/BTC, we can clearly see the accumulation range here, with range support at the all-time low of 330 satoshis and resistance at the December 2016 cyclical support of 900 satoshis. This range has now been in play for over a year and plenty of volume has been coming in here, with particularly clear high-volume periods visible on the daily. On that timeframe, we can also see a similar breakout > retest of the 360dMA, with significant volume coming in recently. I have been buying this range and will be looking to hold my position for at least a retest of 1500 satoshis, but likely higher, should conditions prove fruitful.
Price: $0.0129 (141 satoshis)
Market Cap: $16.419mn (1,790 BTC)
Thoughts: Constellation is one of my favourite low-cap projects and it has yet to really begin its first long-term bull cycle, which is particularly exciting.
The DAG/BTC chart is the relevant one here, for me, as it showcases clearly the harsh downtrend that followed DAG’s initial trading, with price falling from the all-time high at 600 satoshis to the all-time low at 19 satoshis; insane, I know.
Price formed an accumulation range with that low as the ultimate base and 67 satoshis as resistance, breaking out above it after over half a year of consolidation in September 2019. Price then rallied for months, hitting 289 satoshis in December 2019, before beginning a minor bull cycle that culminated in a retest of the old range resistance as support. Price has since bounced and closed above the 360dMA but I am waiting for the overhead resistance at 200 satoshis to be cleared before I get excited, as this could well be a lower-high. Nonetheless, I expect to be holding DAG for a long time and I ultimately expect new all-time highs.
Price: $0.0049 (54 satoshis)
Market Cap: $11.819mn (1,289 BTC)
Thoughts: Troy is one of those low satoshi coins that has yet to ever pump; those are rather attractive when markets are turning frothy.
Looking at TROY/USD, we can see that the pair has been in a perpetual downtrend, with the all-time high printing the day of initial trading at $0.0107 and price falling for months until the all-time low printed at $0.0013. Since capitulation in March, price has recovered fairly well, closing above the 200dMA and recently closing above the old support turned resistance at $0.00448 on good volume. I am expecting this one to keep moving along towards that February high at $0.0075.
Turning to TROY/BTC, we see a similar pattern of price-action, albeit less extreme, with the all-time high coming in at 143 satoshis on the first day of trading and price finding its all-time low at 26 satoshis in March. This became range support, with price flipping minor resistance at 35 satoshis as support and continuing towards 48 satoshis where it printed a double-top in June. Price has since broken above and closed above, retesting the level as support, and now looks ready for bullish continuation to 70 satoshis; above that, we have 92 satoshis as the next area of interest. If it can break that level, there’s very little doubt it would cannon up into price discovery above that all-time high.
Altcoin Market Cap:
Market Cap: $103.3bn (11.26mn BTC)
Thoughts: The altcoin market hasn’t really moved too far since last week, rallying only a few percent. Despite that, many alts have been seeing 50+% days. The reason is simple; large caps aren’t moving and appear to be waiting for Bitcoin or at least some further consolidation in their own pairs, whilst midcaps and lowcaps are flying.
So, where are we with altcoin market cap against the dollar and against BTC?
Well, looking at ALT/USD, the weekly shows, in my opinion, a similar period of consolidation to that of 2015/16. We are also consolidating right at the 200wMA and pressing up against trendline resistance, more clearly visible on the daily. If we look at the daily, what I am most interested in is whether we can pop above that trendline resistance and move towards the resistance at $132bn; a previous area of support for the altcoin market. If we start to close above that, I think Ethereum will go mental and we will well and truly be leaving the disbelief stage of the cycle. However, if BTC/USD takes a shit here and drags alts down with it, we could see a retest of the 200dMA and 360dMA, although you’d want to see alts remain above the 200dMA now that it has crossed above the latter in order to retain the bullish trend. If we close below both, it will likely be due to BTC/USD being back at the yearly open around $7200 rather than ETH/BTC having capitulated, in my opinion.
Turning to ALT/BTC, the altcoin market looks much more promising here – valued against Bitcoin – than it does against the Dollar, naturally due to the position BTC/USD is in. Looking at the weekly, not only has the market recovered the entire capitulation from earlier this year, but it has recently closed back above the historical trendline support from many years ago, now pressing up against significant resistance. Turning to the daily, we can see that the market closed above the 360dMA, which had capped it since July 2018. If we can now pop above 11.7mn BTC, and thus the trendline resistance from the January 2018 all-time high, I think alts will rally against BTC – on the whole – for many more weeks. If alts (primarily ETH/BTC) falter here and reject at trendline resistance, I think we’ll see the market return to ~10mn BTC; just over a 10% drop. Where we go from there entirely depends upon the reaction we see…
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 firstname.lastname@example.org.