Market Outlook #96 (12th October 2020)
Hello, and welcome to the free edition of the 96th Market Outlook.
In these free versions of the Outlook, I provide my analysis on Bitcoin and Ethereum.
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Market Cap: $211.877bn
Thoughts: Despite the sudden rush of excitement among Crypto-Twitter after last week’s promising close, it would do well not to get too ahead of ourselves just yet.
If we begin by looking at the weekly, no doubt the picture is significantly more attractive than it was just a few weeks ago, but there is plenty of resistance overhead. Volume did decline last week on BitMex, but this is very much likely due to the mass exodus from the platform following the CFTC news regarding arrests being made. Having looked at volumes on other exchanges, last week traded higher volume than the preceding two weeks of tight price consolidation. This is a good sign, but I am loathe to get ahead of myself here, given that $12,200 and $12,500 are not too far away and acted as serious resistance on the first test. As I mentioned last week, any hint of short-term bearishness disappeared upon the multiple tests and failures to move lower after the initial $9,790 low, particularly in the context of the trendline breakout > retest from the all-time high. We are now firmly above the $10,600 pivot also, which acted as support last week as the weekly low. Given all of this, it does seem that the next area of importance is $12,200. The two scenarios I am considering here are: a longer-term range being formed, as mentioned last week, within $9,790-$12,500 area, which becomes a likely scenario if we reject at $12,200; and a resolution to the upside of this range and a confirmed weekly breakout above $12,500, which would be very bullish indeed and open up a test of $14,000.
Turning to the daily, price has broken above short-term trendline resistance and horizontal resistance at $11,100, which I mentioned would be a key level early this month. If we can push higher from here and close a daily above last week’s high, I would be very much interested in taking an intraweek long should we come in and retest $11,100 as support. As I mentioned earlier, that $12,200 area is the next major resistance and I’d expect price to push towards it this week if we can hold above $11,100. For bears, a move back below $11,100 would be ideal, as the breakout would have trapped longs and a flush of the trendline support from $9,790 would be expected.
Price: $369.98 (0.03297 BTC)
Market Cap: $42.15bn
Thoughts: Having printed inside week on both its pairs the week before last, ETH/USD printed a bullish engulfing this past week, pushing it firmly back above an all-important level.
Beginning with ETH/USD, we can see from the weekly that price closed back above $365, which has been acting as a magnet for several weeks now, with price having left a clear double-bottom at $309, which still concerns me. That said, if lower time-frames can start pushing above $389, I would expect to see $448 retested as resistance. Looking at the daily, a move above that $389 area would turn market structure bullish again (higher-high after a higher-low), and I’d look for short-term longs as mentioned into that $448 level. However, if price sweeps $390 and rejects, I’d be looking to get short, expecting a flush of the double-bottom at the bottom of the range to follow.
Turning to ETH/BTC, the pair hasn’t really moved despite the impressive week for BTC/USD. In fact, we have printed inside week failure, which opens up a move into 0.034 short-term, as the high of the inside week. Volume continues to fall week-on-week since September, but price is failing to move lower; a positive sign and one that is making me reconsider my expectations of a move into 0.0286 before another leg higher. In fact, the reaction in ETH/BTC if BTC/USD does continue higher towards $12,500 will be the most telling: if the two move up in tandem, I would expect the ETH/BTC bottom to be in at 0.0311 (assuming we do not see Bitcoin reject hard at $12,500). This would be the biggest signal for having overweight exposure to alts. For now, I am cautiously optimistic, given the lack of a pull-back from the pair despite Bitcoin moving higher. I would like to see a series of higher-highs and higher-lows form before I can truly get excited about the pair again, however.
And that concludes this week’s free Market Outlook.
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