Market Outlook #99 (2nd November 2020)
Hello, and welcome to the free edition of the 99th Market Outlook.
In these free versions of the Outlook, I provide my analysis on Bitcoin and Ethereum.
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Bitcoin:
Monthly:
Weekly:
Daily:
Price: $13,396
Market Cap: $248.253bn
Thoughts: Ah, what a sight to behold as we enter the penultimate month of 2020.
Beginning with the monthly, there is very little to say except that price managed to close October basically at the highest close price of all-time (most exchanges were either at or slightly under this price). This is huge. The monthly closed at highs with no real wick, thus no sweep and rejection. As such, as mentioned last week, I am now looking for opportunities for longer-term leveraged longs targeting the all-time high. I do think the US Election and other such extraneous factors could have a short-term effect on price, but the monthly chart speaks for itself here.
Turning to the weekly, I have marked out a rough trajectory for price, similar to recent pushes higher and subsequent consolidations. In fact, the weekly did sweep $13,900 and close below the level, thus I would not discount the possibility of some consolidation here followed by a move lower into $12,500 to find a higher-low and new support base, much like the push above $10,600. More bullish than that even would be for price to continue higher this week, close above $14,000 and then retrace towards the prior range high at $12,500, where I would look for mid-term longs. The most ideal entry would be as close to the trendline support that has formed since price reclaimed the capitulation candle high at $8000. The next area of resistance above $14,000 is $17,150, followed by the all-time high.
Turning finally to the daily, here we can more clearly see the sweep of the high (along with bearish divergence) that may well lead to a period of consolidation here, particularly if US Election results have a downside shock for price. Regardless, the dip is clearly for buying in this market, with a strong trend of higher-highs and higher-lows throughout 2020. 2021 looks bright for Bitcoin.
Ethereum:
ETH/USD
Weekly:
Daily:
ETH/BTC
Weekly:
Daily:
Price: $383.41 (0.02868 BTC)
Market Cap: $43.424bn (3,248,562 BTC)
Thoughts: As anticipated, Ethereum continues to lag Bitcoin because ETH/BTC continues to put in lower-lows. As I said last week, I am uninterested in ETH as a play instead of BTC until this pattern shows signs of reversal.
If we begin with ETH/USD, from the weekly we can see that price is currently consolidating above $365, having printed an inside week. That said, it remains firmly within the bearish engulfing candle range, with $309 as support and the 2020 high at $491 as resistance; all price-action within this range is irrelevant long-term – it is a break and close above or below either side that would dictate the mid-term trajectory for the pair. Turning quickly to the daily, we can see that price posted higher-highs for the first time since September began but is now struggling to hold above the breakout level at $392. If we see price falter further and fall below $365 again, turning market structure on this timeframe bearish again, I’d expect to see $309 retested as support. If we see price hold here, $448 is the next key area of resistance.
Turning to ETH/BTC, price behaved exactly as expected following Bitcoin’s push higher last week, breaking below support at 0.031 and closing firmly below it. Price pushed into the prior resistance turned support at 0.0286 that I have had my eye on for weeks now, and now I am looking for signs of reversal. That said, we could easily squeeze another 5-10% lower if BTC/USD breaks cleanly above $14,000, and the next major support is at 0.0262. Either way, it is between these two levels that I expect another higher low to form in the series of such higher lows since September 2019. ETH/BTC is trending higher long-term, no doubt about that. If we drop into the daily, we can see price is contesting with the 200dMA, but we may well see a spike lower towards trendline support or even the 360dMA if BTC continues higher; as such, I am now looking for bullish divergences or shifts in daily market structure (higher-high followed by higher-low) to indicate when I should re-enter longs.
And that concludes this week’s free Market Outlook.
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