Market Outlook #89 (Free Edition)

Market Outlook #89 (Free Edition)

Market Outlook #89 (17th August 2020)

Hello, and welcome to the free edition of the 89th Market Outlook!

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

If you’d like to check out the premium version of this post, including analysis and trade ideas for Tron, Celer Network, Swipe, Stratis, V-ID and more you can find it here.

Bitcoin:

Weekly:

BTCUSDWeekly

Daily:

BTCUSDDaily

Price: $11,878

Market Cap: $219.315bn

Thoughts: So, much like the weeks spent in the previous range, another week passes by north of $10,600 and there is little to add for Bitcoin.

If we begin with the weekly, however, there is one point of particular interest, which is is that last week closed at the highest price since Q1 2018 and on slightly higher volume than the previous week of consolidation. Straight off the bat, this indicates to me that the trend will continue higher for now, although, if you look at the steepness of the rally at present, this would put us at all-time highs in November. Now, as we all know, when Bitcoin gets going, it really gets goingbut I think new all-time highs may be a stretch for the next 10-12 weeks… Given that, the next obvious point is that we must consolidate somewhere and based on the strength of the current trend, I would imagine we won’t stop until that $14k high is tested, which will be the most major resistance on the path to new all-time highs. As I have mentioned, whilst we remain above $10,600 and above that trendline resistance that had capped price for so long, I remain bullish.

If we turn to the daily, we can see price coiling up below $12,170, which has been capping price during August, with local support at $11,080. Below this, we find the major support at $10,600, which was retested shortly after the initial breakout above that level. Given the volume profile and the rising lows alongside a flat top (ascending triangle-esque) that we’re seeing play out here, I am expecting upside resolution here to clear out the $12,170 resistance. What happens following that, I am not sure of, as it may be the case we see rejection here but we will need to look at daily closes above or below the level to confirm this. Regardless, my bias remains bullish.

*UPDATE: As I’m sure you’re already aware, price has already broken through resistance at $12,170 as I was concluding this post, and so I figured I’d provide a quick update. I am looking for a daily close above $12,200 to open up further upside for the coming days as price approaches $13,000, followed by a retest of $13,950. I expect this will hold above $12,200 given the volume that we’ve seen come in here; onwards and upwards.


Ethereum:

ETH/USD

Weekly:

ETHUSDWeekly

Daily:

ETHUSDDaily

ETH/BTC

Weekly:

ETHBTCWeekly

Daily:

ETHBTCDaily

Price: $427.59 (0.0359 BTC)

Market Cap: $47.982bn (4,037,852 BTC)

Thoughts: Ethereum continues to look even more bullish than Bitcoin, leading the charge forward last week and finishing the week strong.

If we begin with the weekly, we can see that price closed above the previous two weekly highs, effectively closing at the high of the week ~$448. Volume improved on the previous week and remains much higher than during the May-July period. As I mentioned last week, my eye is on $550 now that we have cleared $365 and sustained above it, with last week actually retesting that level as support before bouncing into the weekly close. Overall, this is undoubtedly bullish on the weekly timeframe and there isn’t much in the way of resistance around here.

Turning to the daily, however, we can see bearish divergence here from the previous high at $415 and last week’s high at $449; that said, don’t be a hero and start shorting bearish divergences when the momentum in this bull market is a strong as it is. If anything, this is simply a cue to either take some profits on open positions or wait out what may be a period consolidation below $450 before an eventual breakout. Areas of interest here are the $365 low if we manage to sweep that; this would be the most ideal long entry for me. Beyond that, there really aren’t any interesting levels above until we get above $500.

Turning to ETH/BTC, the weekly is playing out as expected, with another rally last week that has taken price into channel resistance from the Q4 2019 highs. Volume remains  high but price is no longer hugging the curve of the parabolic rally, and so I wouldn’t be surprised to see ETH/BTC take a breather here for a short while given that it has been the leader for so long now. I would expect that 0.042 high to be tested before November, so that’s my mid-term target.

Turning to the daily, again we can see strong bearish divergence here, but I’m not shorting anything in this market. What this does suggest, however, is the high probability of an upside breakout for BTC/USD, as ETH/BTC would likely move back a little or hold here in that scenario rather than continue upwards. Given the steepness of the short-term trendline support, I expect this will be broke and price will consolidate above 0.0326 for a while before moving towards that 0.042 high.


Litecoin:

LTC/USD

Weekly:

LTCUSDWeekly

Daily:

LTCUSDDaily

LTC/BTC

Weekly:

LTCBTCWeekly

Daily:

LTCBTCDaily

Price: $64.19 (0.0054 BTC)

Market Cap: $4.189bn (352,522 BTC)

Thoughts: Litecoin has been a laggard among the major for some time now, but recently it has begun to show signs of life.

Looking at LTC/USD, we can see on the weekly that price is pushing right up against trendline resistance from 2018 and the 200-week moving average. Initially, price was range-bound for most of Q2 and Q3 between support at $39 and resistance at $51, but a couple of weeks ago it broke out above the range and closed above, rejecting at the 200wMA. Since, price has been consolidating below this confluence of resistance and I am now expecting a breakout above the level to follow. Risk-averse traders would be wise to wait for a weekly close above these levels before looking for LTC longs. Now, turning to the daily, we can see that price not only reclaimed the 200dMA upon breaking out of the range but also the 360dMA, with it acting as support last week before price bounced into the pivot at $64, where it currently sits. Any close above this level would open up a move towards the 2020 high at $85. I am bullish whilst we are above the 360dMA; unless we move back into that range, there is no reason to expect downside moving forward.

Turning to LTC/BTC, from the weekly, we can see that trendline resistance from the all-time high is still a long way overhead, but more recent trendline resistance from June 2019 has recently given way, though not in any dramatic capacity; in fact, despite the breakout, price remains range-bound between support at 0.0044 and resistance at 0.0055. If we start to see the weekly close above this resistance, the next level of interest is the prior support at 0.0068. Turning to the daily, we can see that not only is range resistance capping price but also both the 200dMA and 360dMA. A breakout above both of these would signal a more sustained reversal for the pair and likely a lot of catching up, with the 2020 high at 0.0082 the next resistance beyond 0.0068. The bearish scenario here would simply be a rejection at this resistance followed by continued consolidation, or – though I do doubt it in these market conditions – a break below range support, which would open up a lot more downside.

And that concludes this week’s free Market Outlook.

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