Market Outlook #93 (21st September 2020)

Hello, and welcome to the 93rd instalment of my Market Outlook.

In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Chainlink, Tezos, Digibyte, Fantom, Origin Protocol and COTI, as well as updating my thoughts on Altcoin Market Cap as we approach Q4.

As ever, if you have any suggestions for next week’s post, feel free to leave them in the comments below.

Bitcoin:

Weekly:

Daily:

Price: $10,623

Market Cap: $196.366bn

Thoughts: Bitcoin is looking shaky as we move towards Q4, despite reclaiming an important level last week.

If we begin with the weekly chart, notice firstly that price actually closed back above $10,600 last week; I had mentioned in the previous outlook that I wanted to see this occur in order to maintain short-term bullishness, but what we didn’t see in conjunction with the level reclaim is an accompanying breakout in volume – weekly volume actually decreased on the previous week. As such, I am not considering this a valid reclamation of the all-important level, and in fact it appears that we are putting in a lower-high on the lower time-frames before the next leg down. Sticking with the weekly, the key levels here are obviously the monthly low at $9,790, a break below which would open up a move down below that consolidation of clean lows around $8,825. Below this, the next area of support for me is $8,000, which is the capitulation candle high. What I am looking for over the next few weeks is for price to form a swing-low above the 200-week moving average, consolidate for a while and begin moving higher. Looking at this, I would expect October to be when we find the next mid-term bottom, and if we start to see signs in the $8k-$8.8k area of a bottom, I’d be looking to open up new longs there for the next leg of the rally into $14,000, which I still think we hit by January 2021.

Turning to the daily, here I have provided a more granular breakdown of the current bearish structures; we are seeing highs form, get swept then retested as resistance and a dump follows. Last week, we rallied back above $10,600 and touched the $11,100 area that I mentioned as a potential turning point. This all occurred on declining volume, and following the first push into $11,100 we got a sweep of the high and have since begun to fall off. Now, if price does manage to hold above $10,600 despite the bearish volume profile, I would be looking for a higher-high above $11,100 and a breakout above trendline resistance to revert my short-term outlook to one of bullishness. However, I don’t think that’s what we’re going to see occur. If we look to legacy markets, which are so highly correlated with crypto, there are signs of reversals across the board, all being driven by the rebound in the Dollar and the increasing VIX prints. Whilst legacy looks to be entering a period of higher volatility, I am loathe to be bullish crypto. As such, I would expect that $9,790 level to get flushed, followed by the $8,820 area. I do think we’ll find some support at this point, as there is a confluence of important levels and moving averages here. Once we get down into that area and I see the reaction, I’ll have a clearer idea on what to expect for the subsequent weeks. I want to see this confluence of levels swept, perhaps with a deep wick on the weekly timeframe, and ultimately I want to see buyers step in and push price back above the 200dMA. We’re in for a wild few weeks, I’m sure…

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Ethereum:

ETH/USD

Weekly:

Daily:

ETH/BTC

Weekly:

Daily:

Price: $349.59 (0.03281 BTC)

Market Cap: $38.894bn (3,659,125 BTC)

Thoughts: Ethereum continues to look weaker than Bitcoin, having stalled at significant resistance on both pairs.

If we begin with ETH/USD, from the weekly we can see that the bearish engulfing candle remains the range within which price is currently trading, although the prior support turned resistance at $365 is once again acting as resistance and looks ready to send ETH lower. Looking at the levels below, my first area of interest assuming Ethereum moves lower from here is that $308 low from the bearish engulfing, below which we have the Q1 high and 200-week moving average converging at $290. That’s a 20% drop from current prices and would be my first area of interest for a bounce; an area I will be focusing on intra-week if we do come down towards it. If we fail to hold that area as support, the next support is at $255, followed by minor support at $213. If we turn to the daily, here we can see that price is breaking down below trendline support from the March capitulation low. Moreover, the 50% retracement of the entire swing from $89 to $491 is at $290; more confluence for a potential bounce as price comes into that level.

Turning to ETH/BTC, the parabolic curve is certainly coming to its conclusion for the current swing, as price looks ready to move back into the prior highs at 0.0286 to find support. If we look at the weekly, the trend is still clearly bullish on the higher timeframes, with higher-lows and higher-highs having been put in since September 2019, and I think we’ll see another higher-low form in that 0.026-0.0286 area. Looking at the daily, the most important level at the moment is 0.0327, which is coming under fire at the moment, as it looks to hold for its 5th test. I doubt sincerely that this level holds, so I am looking for price to move down into that confluence of support around the 200wMA, 360wMA and prior resistance. This does mean that we should expect further bloodshed in alts against BTC over the coming weeks as ETH/BTC finds its next low, but we’ll discuss that at length later in this post. For now, it is quite clear that Ethereum looks topped out.

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XRP:

XRP/USD

Weekly:

Daily:

XRP/BTC

Weekly:

Daily:

Price: $0.238 (2,241 satoshis)

Market Cap: $10.677bn (1,007,534 BTC)

Thoughts: Despite the bloodshed among alts recently, XRP appears to be holding up better than most.

If we look at XRP/USD, from the weekly, we can see that price broke out above trendline resistance from June 2019 in August, but failed to breach resistance at $0.33 that has capped price since September 2019. Price has since fallen off and is now retesting old support at $0.24, as well as the trendline breakout, but – given my thoughts on crypto overall for the next few weeks – I doubt this area holds. I do think we see $0.175 retested and I’d be looking for that level to be swept and reclaimed before looking to get long the pair. Turning to the daily, price has come into the 61.8% retracement of the July-August swing, but market structure is clearly bearish with the series of lower-highs and lower-lows. Whilst ordinarily this would be a good place to look for a long, in unfavourable macro conditions I would prefer to stay on the sidelines here. If we, however, saw a break above $0.26 to print a higher-high, I might become interested.

Turning to XRP/BTC, here the picture is a little different. From the weekly, the downtrend from September/October 2019 becomes visible, with trendline resistance capping price since. What is interesting is that price is trading near the area of consolidation that preceded the December 2017 – January 2018 rally. As such, I would expect to see XRP find support in this range, with 1,500 satoshis being the most significant level that I expect to hold, as there is no major support below this. If we see price trade below the 1,900 satoshi low over the coming weeks and perhaps print some bullish divergence, that is definitely an area I want to be a buyer in. Turning to the daily, the only price-action that would shift my expectations from a sweep of that 1,900 satoshi area would be a breakout above both trendline resistance and the two MAs that are currently pushing price lower. If price could get above the 360dMA, it would be the first time since March 2019.

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Chainlink:

LINK/USD

Weekly:

Daily:

LINK/BTC

Weekly:

Daily:

Price: $8.88 (83,755 satoshis)

Market Cap: $3.09bn (291,588 BTC)

Thoughts: Chainlink appears to have popped its current bubble, having put in what looks like a complacency shoulder against the Dollar.

If we begin with LINK/USD, price has fallen over 50% since putting in its all-time high at $20.75, having bounced a few weeks ago at prior resistance around $9 but with that bounce failing to hold, as recent price-action has pushed LINK back below $9. The most important level for me here is that old range resistance at $4.85, which, if price continues to fall towards, would also sweep the swing-low at $6 that preceded the rally to all-time highs. That’s precisely the sort of movement I look for to get long, but it remains a long way away yet. If we turn to the daily, the classic euphoria > complacency becomes quite clear, with market structure turning bearish after the $18 lower-high formed, with $13,80 then acting as resistance. Price has since fallen back below $9, with the 360-day moving average aligning with prior range resistance at ~$5. In order to be a buyer in that area, I’d want to see some sort of capitulation followed by a period of re-accumulation in a tight range.

Turning to LINK/BTC, though the picture is a little prettier, it still isn’t the best after last week’s close below 90k satoshis. From the weekly, we can see that the main area of support lies around 57k-60k-satoshis, as this is prior resistance and would have confluence with long-term trendline support. If this support area gives way, however, the next major support is down at 37.5k-40k satoshis. To be honest, I wouldn’t want to be buying LINK if the long-term trendline support doesn’t hold, as that has been pushing price higher since May 2019. Turning to the daily, I think we see a ~30% drop over the coming weeks into that sub-61k-satoshi area, which aligns with the 360dMA. I do think we could see price bounce a little higher, as the 200dMA has been reliable for over a year. Moreover, RSI is already reaching yearly lows. If we see some bullish signs as price approaches the 200dMA, it may be a case of front-running the confluence of levels below it and buying for a bounce. I’ll keep this one updated as we move lower.

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Tezos:

XTZ/USD

Weekly:

Daily:

XTZ/BTC

Weekly:

Daily:

Price: $2.00 (18,960 satoshis)

Market Cap: $1.491bn (140,968 BTC)

Thoughts: Unfortunately, my Tezos long at range support didn’t work out, with my clear invalidation being breached as the BTC pair closed below the 360dMA. Thankfully, the invalidation level was spot on, as the subsequent price-action has been nothing short of nasty.

If we look at XTZ/USD, price has fallen below range support at $2.25 and is now coming into the prior all-time highs at $1.95; again, ordinarily this would be a great spot for a bounce, but I am loathe to enter Dollar pair longs whilst BTC looks ready to shit the bed. If we look lower, the next area of interest would be the trendline support, below which there is support at $1.23. Turning to the daily, the 360dMA would give perfect confluence or a long in this region if the rest of the market didn’t look so terrible; if you’re ballsy enough, it might be a decent contrarian long, but I am in the mode of capital preservation at present and so I’ll be sitting it out. If $1.95 does give way, there really isn’t a lot of support below until that trendline support, so that’s where I would be looking to assess the situation for longs.

Turning to the BTC pair, here we can clearly see sellers coming in as the range support at 24k satoshis broke, with last week’s close firmly below the level. Price is now in no man’s land, with the next major support at ~15k satoshis. I would actually look to short this if we do get an underside retest of that 24k-satoshi area, as long as we haven’t pushed much lower prior to the retest. Looking at the daily, we have lost the 360dMA, which hasn’t been traded below since November 2019. The current rate of decline would see price retesting that old range resistance at 14,600 satoshis in late October, which is where I’d look to be a buyer. For now, it is a bleak outlook for Tezos.

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Digibyte:

DGB/USD

Weekly:

Daily:

DGB/BTC

Weekly:

Daily:

Price: $0.029 (283 satoshis)

Market Cap: $404.52mn (38,343 BTC)

Thoughts: Digibyte is somewhat bucking the trend, with the past week’s price-action pushing it higher instead of lower.

Looking at DGB/USD, from the weekly we can see how strong DGB has been since mid-March capitulation, rallying almost 20x against the Dollar into the 2020 high at $0.039 in August. Moreover, volume has been declining as price has consolidated between $0.017 and $0.028, and hidden bullish divergence is forming as price prints a higher-low above $0.02. If we look at the daily, it might well be that price is simple retesting trendline support as resistance from below, having broken out above the ascending triangle and dumped since. If that’s the case, we should see price reject here and break lower below $0.02, perhaps retesting the 360dMA at $0.013 (where I would absolutely be interested in buying). However, if DGB is able to reclaimed trendline support and climb back above today’s high, I think we see it push for $0.05.

Turning to DGB/BTC, it is quite clear to see that price is currently being capped by the 200-week moving average, with a range having formed between support at 228 satoshis and resistance below 300 satoshis. If we see a weekly close above 300 satoshis, the next area of interest would be 420 satoshis. Looking at the daily, there isn’t much to add here except that no one should be looking to buy right here, pre-empting a breakout; 140 satoshis remains the most optimal entry.

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Fantom:

FTM/USD

Weekly:

Daily:

FTM/BTC

Weekly:

Daily:

Price: $0.035 (329 satoshis)

Market Cap: $73.42mn (6,959 BTC)

Thoughts: Fantom has recently broken Dollar all-time highs but now looks a lot weaker than one might have expected it to.

Looking at FTM/USD, we can see that price rejected at the prior all-time high on the weekly, wicking to $0.059 but closing firmly below $0.045 and since being unable to move back above that previous ATH. If we see Fantom pull back with the rest of the market, I think it could fall back towards trendline support. Given the struggle to hold at this level and the repeated failures at $0.045, I sold the bulk of my position on that retest a couple of days ago, with a view to rebuy much lower. Confluence for this outlook came when Fantom announced the launch of their DeFi solutions but still failed to reclaim that old all-time high. Now, if price does buck the trend of the rest of the market and start moving higher, I’d only look to rebuy on a weekly close above $0.045. Looking at the daily, that $0.0245 support below looks to me the area to watch, as, if that gives way, the next support is at $0.015, which roughly aligns with the 200dMA.

Turning to FTM/BTC, a similar picture is present, although with a failure to break new all-time highs and with price failing to close the weekly above 375 satoshis, which has capped price for the bulk of its history, with no weekly close recorded above that level ever. Given this, I think we see price move back below 230 satoshis towards that prior resistance at 191 satoshis, which would be an area I begin to reallocate capital in.

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COTI:

COTI/USD

Daily:

COTI/BTC

Daily:

Price: $0.038 (368 satoshis)

Market Cap: $22.05mn (2,090 BTC)

Thoughts: COTI has had a rough few weeks, but the project continues to progress fundamentally and I am looking to add to my position for the first time since May if we get another flush lower here.

Looking at COTI/USD, the picture is a little mixed, as trendline support has given way recently but price has come into the 200dMA and prior resistance at $0.033. If we see some push-back here from buyers, I’d be happy to sit on the sidelines with my current position and wait out the next period of consolidation, expecting it to precede another leg higher towards the all-time high. However, if this level gives way and we move back towards $0.0195 (or above it slightly at the 360dMA), I’d be looking to add to my long-term position, as this is a project I expect to outperform in 2021.

Turning to COTI/BTC, we are currently sat at the 200dMA and prior resistance turned support, but I’d be looking to buy a flush of this level into the 360dMA around 210 satoshis or lower. I think we see price consolidate above 185 satoshis before the next leg of the cycle takes it above 800 satoshis over the coming months. If anyone has been waiting for an entry on COTI, you might just be getting an ideal one in the next couple of weeks.

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Origin Protocol:

OGN/USD

Daily:

OGN/BTC

Daily:

Price: $0.19 (1,819 satoshis)

Market Cap:  $24.78mn (2,349 BTC)

Thoughts: Origin Protocol is a request from a reader but it has not been trading for all that long, and so there doesn’t appear to be any distinct market cycle that we can refer to here on either pair. In fact, as there is only ~6 months of price-data, both pairs actually look near-identical.

If we look at OGN/USD, we can see that the all-time low was formed on the initial trading day at ~$0.1, with price then seeming to have formed a large range between that low and resistance around $0.47. What concerns me here for holders is that the $0.47 level has been breached a couple of times but only by wicks, with subsequent price-action leading to dumps, suggesting that this range resistance is not yet ready to be flipped as support as supply in that an area is simply too great. Moreover, if we look at the recent movements, price made a high above the range at $0.66 but then fell off, retested $0.47 as resistance and then has dumped straight through prior resistance turned support and the 200dMA at $0.28. I would not be keen on holding this here for any short-term trades as it looks like it wants to retest $0.13, below which is the all-time low if that fails to provide support.

If we look at OGN/BTC, the picture is identical, with the next support approaching imminently at 1,600 satoshis, and with the 1,150-satoshi all-time low just below that. I’d be looking to buy a break below the all-time low followed by a reclaim of the level on good volume; anything else is uninteresting to me here.

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Altcoin Market Cap:

ALT/USD

Weekly:

Daily:

ALT/BTC

Weekly:

Daily:

Market Cap: $136.65bn (12,884,476 BTC)

Thoughts: Funnily enough, despite the bearishness of the past few weeks, my mid-term outlook (next ~6 months) has not changed much on Altcoin Market Cap, both against USD and against BTC.

The reason for this is because I mentioned previously that the 200wMA for ALT/BTC would be the most important level to close above if the alt-party was to continue, but we poked above the level and failed for two consecutive weeks, as can be seen on the weekly chart. Given that, I expect we will see altcoins underperform Bitcoin for the next few weeks, as the market moves back towards the reclaimed support area around ~12.3mn BTC. I think we could push lower than that, however, particularly if we think back to the ETH/BTC analysis and how the pair appears poised to retest 0.0286. If we look at the daily for ALT/BTC, I have illustrated the trajectory I roughly expect alts to take against BTC over the next month or two, with a retest of the 200dMA looking likely, followed by a higher-low and then a continuation of the trend of altcoin outperformance as we move into 2021. Ultimately, there is nothing on the chart that says the bull cycle is over; the trend is still higher-highs and higher-lows. Unless we see the altcoin market fall back below that trendline resistance and the 200dMA, I don’t see any reason to be mid-term bearish on altcoin outperformance. However, short-term the chart looks terrible, with a double top at 14.6mn BTC looking like it is ready to push ALT/BTC back below a 12.4mn BTC valuation, which would open up a larger downswing towards that 10.7mn BTC area.

IF we look at ALT/USD, we have actually broken above a year-long range resistance at $132bn, having held above that level now for several weeks. I do think that the trendline support from March will give way over the next couple of weeks and we will likely come back towards that 200wMA. If we look at the daily, the next area of support back inside the range is $119bn followed by the 200dMA below it around $100bn. Ultimately, I expect a low to be put in for alts against the Dollar around this $100bn area, following which we will resume the uptrend and push on towards the next major resistance at ~$306bn in 2021.

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 nik@altcointradershandbook.com.

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