Market Outlook #86 (27th July 2020)

Hello, and welcome to the free edition of the 86th Market Outlook!

In this week’s post, I will be covering Bitcoin, Ethereum and XRP.

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Bitcoin:

Weekly:

Daily:

Price: $10,647

Market Cap: $198.31bn

Thoughts: After many weeks and even months of waiting, the breakout has arrived this week.

I’ll refrain from too much preamble on Bitcoin, but it is somewhat relieving to know that the indecision has evaporated and we now very likely have a direction – that is, pending successful higher time-frame closes.

Looking at BTC/USD on the weekly, here we can see that price, having closed last week strong after several weeks of tightening ranges, continued on today and has finally poked its head above the triple-top resistance at $10,585 that I (and all else) have had our eyes on for a long time. I mentioned many times that I expected this level to be breached regardless of what happened following the breach, simply because of the sheer amount of easy liquidity that would be available there. Now, we are still 6 days out from the weekly close, and as I have mentioned previously I am looking for a weekly breakout to confirm a shift in trend and the likelihood of significant further upside. Moreover, though last week saw the first break higher in weekly volume for a while, I am expecting much more volume to be traded this week than the previous in order to confirm the breakout. Further, we also have the trendline resistance that capped price at $14k in 2019 still in our way. As such, I am looking for a weekly close above $10,900-$11,000 to really confirm this breakout, on solid volume. That, for me, would render the possibility of retesting the yearly open at $7160 very unlikely, and I would be looking for a raid of $14k to come over the course of the next couple of months, if not several weeks, due to momentum. Now, the bearish scenario is that we continue to move higher for the next couple of days but close out the week back below $10,600; this would be a huge failure for bulls, particularly given the significance of the levels being breached, and I would look to at least hedge my BTC holdings, if not look for shorts back to the local support at $8,800. Let’s see how this week goes, but this is promising stuff for the rest of 2020.

Now, turning to the daily, here we can more clearly see the triple top and the range that had capped price for months, with price having moved a good $80 above the level. The first sign of bullish continuation would be for the daily to now close above the level, rather than print a swing-failure of the triple top. That said, I would not look too deeply into swing-failures on the daily time-frame at such levels; the weekly is far more reliable for BTC/USD for those patterns. The volume coming into today is very good indeed and if we start to move towards $11,000 over the next day or two I would then be looking for intraday longs around $10,650-$10,700, as Bitcoin tends to front-run those looking for precise breakout/retests. As I mentioned earlier, if we start to see price fall back inside $10,600, I’d expect $10,125 to be retest (or thereabouts); fail to bounce there and I’d expect a bit of panic to come in and push us lower.

Eyes on the weekly close. I’m sure this week will be full of twists.

Ethereum:

ETH/USD

Weekly:

Daily:

ETH/BTC

Weekly:

Daily:

Price: $316.68 (0.0293 BTC)

Market Cap: $35.761bn (3,176,167 BTC)

Thoughts: Ethereum had a fantastic week, breaking above many key levels and setting the tone – in my opinion – for alts over the coming months.

As we can see from the weekly for ETH/USD, price, having spent weeks capped by the 200wMA, trendline resistance and the horizontal resistance at $254, broke out hard, printing and closing at a new yearly high. The volume on the breakout was significant and I am very much expecting old support turned resistance at $364 to be the next target, following some consolidation above $290. The ideal low-leveraged long-term long would be a retest of the 200wMA as support, but I don’t know if we’ll get it given how BTC/USD now looks too. Turning to the daily, we can see that the lower high at $290 was demolished late last week, with price hitting $330 today and now coming off slightly due to ETH/BTC. Looking at this chart, it looks unstoppable in many respects, although there is that significant resistance overhead. Break out above $365 and the fun really begins.

Turning to ETH/BTC, it seems that the pair is leading BTC/USD, having broken out above resistance a few days before today’s rally in the latter. The weekly shows a clear, strong breakout above 0.0286, printing a higher-high and confirming weekly bullish market structure – there have now been a series of higher-lows and higher-highs since the bottom in late 2019. Given this trend, I am expecting the next target to be 0.042 for the pair, though I would expect a little consolidation in this area before we continue higher, particularly if BTC/USD continues to move up. Turning to the daily, the only thing to add here is that a possible area for price to retest as support is trendline resistance, though a true show of force from bulls would be to hold above 0.0286. Either way, whilst price remains printing higher-highs and higher-lows, I remain positive on alts in general.

XRP:

XRP/USD

Weekly:

Daily:

XRP/BTC

Weekly:

Daily:

Price: $0.2185 (2016 satoshis)

Market Cap: $9.78bn (889,028 BTC)

Thoughts: If I’m honest, XRP looks like on of the less attractive majors at this point.

Beginning with the weekly for XRP/USD, we can see that the support at $0.175 was lost during mid-March capitulation, with price even sweeping the 2017 range low at $0.125 into $0.11; that said, the recovery since has been rather pathetic, with price unable to break above the prior support at $0.24. We do see some signs of a shift, however, following the retest of $0.175 as support following the break back above the level, with price clearly happy in consolidation between those two levels at present. Until XRP/BTC begins to look better though, I would not be looking at XRP/USD for longs, instead preferring BTC/USD longs in those cases. Briefly looking at the daily, we can also see that the pair is still capped by the 360dMA and trendline resistance from June 2019, both of which offer significant overhead resistance.

Now, looking at XRP/BTC, we can see a general downtrend beginning in October 2019 that has led to a break below historical support – now being tested as resistance – at 2250 satoshis. The most recent low has price supported at 1867 satoshis, but if this level is lost the next (and final) major area of support is ~1485 satoshis. As price gets closer to that important level, I would start to become more interested, but whilst it is in no-man’s land and stuck in a downtrend I’m staying away. Again, just like the Dollar pair, the BTC pair remains capped by the 360dMA and trendline resistance; if we see a breakout above both these levels, rest assured I’ll be looking for longs all the way into 4k satoshis.

And that concludes this week’s free Market Outlook.

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