Market Outlook #87 (3rd August 2020)
Hello, and welcome to the free edition of the 87th Market Outlook!
In this week’s post, I will be covering Bitcoin, Ethereum and Komodo.
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Market Cap: $205.888bn
Thoughts: What a week it was for Bitcoin, with a significant weekly close confirming a breakout.
Beginning with the weekly, if you recall from last week’s post I was discussing the significance of a close above $10,900, as this would not only be a break beyond the triple-top but also the trendline resistance from the all-time high back in late 2017. We actually rallied as far as $12,200 but ultimately closed the weekly around $11,100 on the highest volume since May, confirming the breakout. Now, what should we be looking for from here? Well, the first thing would be for price to hold above $10,600, with the level acting as support (we saw instances of this already on the lower time-frames). As long as we remain above $10,600 on the weekly, I think we can expect continuation from here. That said, even a move back below the level wouldn’t be disastrous now that we have a confirmed weekly close above $11k; all we are looking for is for the trends of higher-highs and higher-lows to continue following the March reversal. Thus, unless we see a weekly close below the prior range support and pre-capitulation high around $8100, I remain bullish moving forward. The next obvious area of resistance is the $14k swing-high from last year, beyond which BTC would have a clear path to the all-time high. One step at a time, however.
Turning to the first daily chart, we can clearly see the strength of the breakout, with significant volume traded and price closing well above the triple-top and the trendline resistance. The following day saw a brief retest of the level as support and price climbed higher, ultimately peaking at $12,188. That, as we can see, was a particularly volatile day, with price spiking lower to retest $10,600 again as support. These sorts of moves are expected if we truly are moving towards all-time highs, as there were numerous shakeouts in the previous cycle too. Moreover, we have moved ~$3k dollars in a couple of weeks; a breather is perhaps needed, but not necessary. If we turn to the second daily chart, we can see that yesterday’s candle actually cleared out the low of the first retest post-breakout; given the sweep, I wouldn’t be surprised to see BTC just continue higher from here, having taken out any post-breakout longs that were foolish enough to expect $10,600 not to be retested. I would much prefer to see some sort of consolidation here between $10,600 and $12,200, at least for a short while, but given the momentum I am not too sure we’ll get that. Lastly, if we start to break and close back below $10,600, I’d expect $10,100 to be retested. Below that, the next support is the confluence of the 360dMA, 200dMA and range support at ~$8800.
Price: $383.41 (0.0343 BTC)
Market Cap: $43.11bn (3,779,083 BTC)
Thoughts: Ethereum is an absolute monster at the moment and continues to lead the entire crypto market forward.
Looking at ETH/USD, from the weekly we can see the strong weekly close on higher volume than the previous week, with the close actually peeking above the support turned resistance at $364 too. This is a critical level for the pair, as a sustained move above all but confirms a cyclical reversal with a higher-low and higher-high following the November 2018 bottom into the 2019 high at $364. We are now well-clear of the 200wMA and I would expect ETH to continue leading the rest of the market upwards, with the next major resistance all the way up at $550. Turning to the daily, we can see that price does appear somewhat stretched following the breakout above trendline resistance and range resistance at $254 but I am very much expecting price to remain above the prior 2020 high at $290. Given how bullish ETH/BTC looks, I wouldn’t be surprised to see $290 left untested as support, giving no opportunity for a cheap long. We also have trendline support from the March capitulation that I am expecting ETH to hold above, though there is plenty of room for consolidation here before it is tested.
Turning to ETH/BTC, the weekly confirms for me the cyclical reversal for the pair and thus for altcoins on the whole, with a series of higher-lows and higher-highs beginning in Q4 2019. More importantly, this past week saw the highest weekly volume on record for the pair on Binance, cementing its position as the market leader right now. I am now looking at that 0.042 area as the next resistance, which happens to be the high that preceded 2019’s capitulation; close above that and I think we get a swift retest of 0.054 as resistance. Turning to the daily, we are currently at minor resistance but the rising volume and retest of 0.0286 as support followed by a strong bounce indicates that we won’t be stopping here; however, I wouldn’t be surprised to see a break above 0.035 be followed by a brief dip and consolidation. Interestingly, we can clearly see the steepness of the rally increasing now, as is often the case with long-term reversals. Onwards and upwards. Unless we break back below 0.0286 I see no reason to be bearish on Ethereum.
Price: $0.653 (5857 satoshis)
Market Cap: $79.125mn (7,091 BTC)
Thoughts: Komodo is in a prime area for new buyers to step in or for existing positions to be topped up, in my opinion.
Looking at KMD/USD, on the weekly we can see a sort of inverse H&S unfolding above the support at $0.45, with the capitulation low at $0.19 being the head. Volume remains higher than the levels seen late last year but price is capped by the pivot at $0.88 and trendline resistance (or the neckline, for pattern traders). If we see a weekly close above $0.90, I think we see price continue on to the significant resistance between $1.66 and $2.06, which will be the real test. Close above that area and it is party time for Komodo.
Turning to KMD/BTC, we are back at the range support that has been holding price up for almost a year, with a triple-top having formed at 9,550 satoshis. Entries here provide high R, with a clear invalidation on a close below the range support on the weekly, with initial targets of the 9,550-satoshi resistance. If we start to see prices move beyond the triple-top, the next resistance is 12.8k satoshis, followed by 16.8k satoshis, which is the low that preceded the January 2018 rally. On the daily, we can see that the 360dMA continues to cap price and risk-averse speculators should probably wait until we see a breakout above that area before getting in. For those, like myself, who see Komodo as a long-term hold, any price below 8k satoshis is a deal.
And that concludes this week’s free Market Outlook.
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