Market Outlook #97 (19th October 2020)
Hello, and welcome to the 97th instalment of my Market Outlook.
In this week’s post, I will be covering Bitcoin, Ethereum, XRP, Tezos, Cardano, Monero, Ocean Protocol, Komodo, LBRY Credits and OctoFi.
As ever, if you have any suggestions for next week’s post, feel free to leave them in the comments below.
I’ll refrain from any preamble and just crack on:
Market Cap: $214.291bn
Thoughts: As mentioned last week, Bitcoin is beginning to look better and better following its violent dip in early September, but heavy resistance inches closer.
Given the mass exodus from BitMEX, I have decided to switch my default BTC/USD chart to Coinbase, as a more relevant indicator of volume. If we look at the monthly chart, the key thing I wanted to highlight here is that $13,863 is the highest monthly close of all time, whilst the second-highest monthly close of all time was a few months ago at $11,650; with 12 days to go, October is now approaching that key level once more. As such, I am waiting with eager anticipation for the monthly close; above $11,650 and I think we’ll see bullish continuation into 2021 towards that $14,000 area.
Turning to the weekly, given the consecutive bullish closes since the breakout above $10,600 and subsequent retest in late August to early September, I am now purely focused on the reaction as we approach $12,500 because this will reveal a lot about the strength of the breakout and the bounce. If price ascends towards that current yearly high and rejects (or sweeps the high and fails to close above it), I would be looking to sell BTC back down towards $10,600 at the very least. If, however, price closes above that level, things get very interesting; a higher-high following a higher-low and clear trend continuation. I would expect a test of $13,900 to follow.
Finally, looking at the daily, here I have highlighted these two possible trajectories, with arrows indicating areas to look for continuation longs or reversal shorts.
Price: $379.37 (0.03263 BTC)
Market Cap: $42.894bn (3,690,471 BTC)
Thoughts: Now, Ethereum is lagging behind Bitcoin at the moment, primarily due to a lack of movement in ETH/BTC.
If we look at ETH/USD, here we can see another weekly close above the all-important $365 level, suggesting that bulls are in control at the pivot. That said, volume continues to decline on the pair, but, if we turn to the daily, we can see that price is continuing to test minor resistance at $388. This level looks ready to be broken, in my opinion, and a daily close above that level would open up a retest of $448, above which we find the 2020 high. Ideally, I’d like to see volume break out along with price to confirm the validity of a move above $388. The higher lows into this resistance are certainly promising.
Turning to ETH/BTC, beyond last week’s comments, there isn’t a great deal to add as price remains in consolidation in a very tight weekly range. That said, we are seeing higher lows on the daily, but as of yet we still have no higher high to confirm a bullish reversal. If we do see price push above that 0.034 level, that would make the entire rounded bottom above 0.031 a higher-low in the series of higher-lows from September 2019, which, no doubt, would lead to a retest of the 2020 high at 0.041. Above that, 0.053 is the next major resistance.
Price: $0.248 (2,135 satoshis)
Market Cap: $11.25bn (965,991 BTC)
Thoughts: XRP has been quiet of late and I remain waiting for a breakout on its BTC pair before I get involved.
Looking at XRP/USD firstly, we can see that price closed above trendline resistance from June 2019, and has since returned to retest it as support, consolidating above both the trendline and historical support at $0.24. Looking at the daily, there is one trade here that I’d be willing to take (one very similar to the ETH/USD idea) and that is if price closes above $0.26, I’d be looking for it to push towards resistance at $0.33. It is important to note that price is also consolidating above the 200dMA and 360dMA, and this would be a logical area for a new bottom to be found before the next leg higher.
However, if we look at XRP/BTC, trendline resistance has been capping price since September 2019, and I am loathe to get involved in anything long-term until this resistance is broken. If we turn to the daily, the trendline aligns with the 360dMA and more recently the 200dMA, with price continuing to print lower-lows and lower-highs since August. Get above this confluence of resistances and I think XRP will look primed for a longer-term reversal towards 4,000 satoshis.
Price: $2.30 (19,750 satoshis)
Market Cap: $1.716bn (147,553 BTC)
Thoughts: Tezos, if I’m honest, still doesn’t look appealing against Bitcoin, but against the Dollar it is printing signs of a reversal.
So, beginning with XTZ/USD, we can see that price has retraced to the prior all-time highs at $1.95, which lines up with the OTE between the 78.6 and 61.8 Fib levels. If we look at the weekly, price closed below the double bottom at $2.25 and has since retested it as resistance, with a range having formed between these two levels. Looking at this, it seems likely that the pair is being re-accumulated in this range, with the prior all-time highs acting as the range support. Turning to the daily, we can also see a higher-high above the late September high at $2.37, which appears to be being followed by a higher-low back above the 360dMA. Start pushing higher from here and I think we have a reversal underway, with $2.65 the next key resistance. As I say, as long as price holds above the prior all-time high, I think this is an accumulation range; close below it and the next support is at the trendline.
Turning to XTZ/BTC, this looks much less appealing, with price in no man’s land between major support at 1,450 satoshis and resistance at 2,410 satoshis. If we turn to the daily, we can see that the pair has come into minor support at prior resistance from January, but price is well below the 360dMA and has not yet printed any higher-highs. I would steer clear of trading this pair until price-action becomes clearer.
Price: $0.11 (936 satoshis)
Market Cap: $3.392bn (291,227 BTC)
Thoughts: Cardano is looking ready for another leg higher on both its pairs, having formed rounded bottoms into prior resistance.
Looking at ADA/USD, from the weekly we can see that price retraced from the 2020 high into the cyclical support from December 2017 at $0.074, bouncing here and now somewhat meekly breaking out above short-term trendline resistance. I am expecting price to push higher from here to new yearly highs, with $0.20 the next key resistance. Looking at the daily, price bounced at the 200dMA and has printed higher-highs and higher-lows since; if it can get back above $0.116, I think the reversal is on. Falter here and a retest of the 200dMA is likely.
Turning to ADA/BTC, this is a beautiful example of an accumulation range followed by a test pump followed by a retest of range resistance as support. Price is now consolidating above the range and riding the 200dMA higher. Invalidation is clear here for bulls; we don’t want to see the pair lose the 360dMA, which is currently above 700 satoshis. Hold above that and continue printing higher-lows (as it currently is) and I would expect the next leg to take ADA to 1,845 satoshis. Those that aren’t involved could take a punt at these levels with that invalidation and target and find themselves with a high R setup.
Price: $126.70 (0.0108 BTC)
Market Cap: $2.246bn (192,951 BTC)
Thoughts: Monero continues to outperform, as anticipated a couple of weeks back, and I do think it will continue to do so, subsequent to some consolidation.
Looking at XMR/USD, here we can see that price has closed firmly above the 2019 high at $123, finding resistance at $144 and now consolidating between the levels. Volume continues to rise week-on-week, confirming the breakout, and any prolonged dip is a buying opportunity, with the next area of resistance all the way at $216, should $145 give way. Turning to the daily, we can see that trendline support has been holding firm on this most recent leg higher, with the 2019 high now acting as support. I’d be happy buying dips into this trendline prior to $145 being broken, should price falter here.
Turning to XMR/BTC, again, price has pushed significantly higher in recent weeks on very good volume, most recently finding resistance at prior support below 0.0123. This is critical resistance, as it was support prior to the 2017-18 cycle into the high at 0.034. Given the extent of the rally from range support at 0.006 and the rejection at significant resistance, I would expect to see some consolidation here above 0.01 before continuation.
Price: $0.38 (3,257 satoshis)
Market Cap: $143.87mn (12,363 BTC)
Thoughts: Ocean Protocol has had a hell of a ride since March and – though I am not interested in getting involved – it may well have another leg in it.
If we look at OCEAN/USD, the pair has rallied almost 50x from the March capitulation low of $0.016 to the all-time high in August at $0.75. Since, price has retraced heavily, falling to just shy of the 200dMA and prior resistance at $0.21. Price bounced but remains below trendline resistance and has failed to print a higher-high as of yet, but, should price push higher and break out here, I’d expect a retest of the all-time high to follow. As I said, I am not interested in getting involved due to the extent of the rally, but if you hold OCEAN then further upside is likely whilst price is above $0.21. Fall below, and the next area of support is the 360dMA.
Turning to OCEAN/BTC, it does appear that this pair is playing out its bear cycle, and, as regular readers will know, I am loathe to buy alts against BTC following a bull cycle until they return to their 360dMA, which is still a long way down from here at 1400 satoshis. There is still panic, capitulation and depression to follow. If the pair pushes higher and its USD pair continues to drag it up, I am quite happy waiting for the next cycle before getting involved.
Price: $0.54 (4,693 satoshis)
Market Cap: $66.818mn (5,742 BTC)
Thoughts: Komodo was looking great several weeks ago but has fizzled out and I have exited as price has closed the weekly below 4,750 satoshis. That said, I am eager to rebuy once we close back above that support that held for a year. Moreover, if we look at KMD/USD, the pair is actually sitting just above long-term support at $0.45, so I expect that level to hold, but, as I trade KMD against BTC, the loss of 4,750 satoshis triggered my exit.
Either way, I am bullish Komodo long-term, but I think we’ve still got some consolidating to do before the reversal begins, and I would rather sit on the sidelines until we see a weekly reclaim than risk a slow bleed of 10-15% before we form a spring. The volume traded inside this range has been immense, particularly in August, and I don’t expect those large holders to be underwater for too long before a cyclical reversal – but, as the saying goes, the markets can stay irrational longer than you can stay solvent; and, altcoin whales can hold their breath underwater deeper than you can stay solvent, too.
Price: $0.0225 (194 satoshis)
Market Cap: $10.75mn (923.9 BTC)
Thoughts: LBRY Credits has seen an insane amount of volume traded recently and has, following consecutive weekly higher-highs, traded back into support.
Looking at LBC/USD, price printed a high at $0.038 at the turn of the New Year, before capitulating, reversing hard and printing a higher-high in June at $0.066. Since, it has pulled back to a reclaimed support level at $0.017, where it now looks to be basing. Price is still capped by trendline resistance on the daily, and has fallen back below the 200dMA and 360dMA, but I’d be looking to enter a position should this confluence of resistances give way, with a target of $0.109. There is clearly a lot of speculative interest at this level given the sheer volume being traded around here.
Turning to LBC/BTC, the weekly chart is textbook. However, given the range of historical prices, it is quite difficult to see more recent movements. If we turn to the daily, here we can see a series of higher-highs and higher-lows, with the most recent higher-low appearing to form at present. As a lowcap project, it is absolutely valid to look for entries here, given the retracement back below the 360dMA and the preceding price-action. However, I am waiting for price to push back above 250 satoshis before I get involved, aligning with my thoughts on trendline resistance being broken vs the Dollar. Invalidation for buyers here would be a move back below 112 satoshis. The next area of resistance above the 2020 high is 886 satoshis.
Price: $8.37 (0.022 ETH)
Market Cap: $2.887mn (252 BTC)
Thoughts: OctoFi is a fairly new DeFi project that has come onto my radar and I will be working on a full Coin Report on it in November. However, I thought I’d let you know about it now, as – from preliminary research – it has all the makings of a gem, including strong tokenomics, quality branding and a growing, engaged community. It also has a fully diluted market cap of about $7mn at current prices.
Given its lack of price-data, there isn’t a great deal to draw from the above charts except that I am buying here and holding as long as price holds above the support at 0.018 ETH, targeting new all-time highs above 0.056. If OCTO falls below that support, there isn’t much support back to the all-time low, so invalidation is clear here. I think this one has a lot of potential but I am wary of holding if that support gives way. Risk-averse traders should await a close above resistance at 0.0295 before getting involved.
Looking forward to researching this one in great depth next month, either way. Definitely one to keep an eye on.
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!
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