Market Outlook #29

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


Market Outlook #29 (31st March 2019)

Afternoon, and welcome to the 29th Market Outlook.

In today’s post, I’ll be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as well as providing an update on Litecoin and discussing a low-risk, high-reward opportunity spotted in XEL.

Bitcoin:

Price: $4160

Market Cap: $73.297bn

Thoughts: As anticipated in last week’s Market Outlook, this week brought a continuation of bullish momentum, with price taking out the highs formed mid-March at $4170. With these highs swept, price began to consolidate a little, turning prior short-term resistance into support at ~$4100.

We remain at the very top of the longer-term range, however, and thus caution must be urged to those getting a little too bullish; until price closes on the higher timeframes and on significant volume above $4500, there is no reason to believe the range resistance won’t hold. As such, I expect price to continue moving upwards to take out the local high at $4280, where many stops will be resting, after which we may find significant overhead resistance that necessitates a move back down towards the $4050 level.

That said, we shall cross that bridge when we get to it, and I believe the following week will be one of further bullish continuation.


Ethereum:

ETH/USD

ETH/BTC

Price: $141.56 (0.03457 BTC)

Market Cap: $14.925bn (3,646,596 BTC)

Thoughts: I have provided the Weekly chart for ETH/USD to give some context as to the overhead resistance inching closer, in the form of 15-month trendline resistance. That said, we look set to close the first Weekly candle in the green above the 20-week moving average; something that has not happened since the bear market began in ETH. Declining volume does suggest we may experience a brief drop off as that trendline resistance is approached, and this lines up with my expectations for ETH/BTC.

Looking at the ETH/BTC 4H chart, we can see that price is very much still range-bound, but the recent uptrend remains intact and there is a clear divergence in the RSI, indicating underlying strength in the market. I expect price to make another attempt at 0.0352 BTC this coming week, followed by a rejection, with price falling back to the trendline before finally making a move above the short-term resistance. Ultimately, I expect to see a breakout above range resistance at 0.036 BTC in April.


Monero:

XMR/BTC

Price: $53.50 (0.01307 BTC)

Market Cap: $903.56mn (220,789 BTC)

Thoughts: 106 days into accumulation… partial profits from outside trades continuing to be cycled into Monero inside this range.


Litecoin:

LTC/USD

LTC/BTC

Price: $60.59 (0.0148 BTC)

Market Cap: $3.703bn (904,948 BTC)

Thoughts: So, I’ve provided a potential fractal for LTC/USD on the Weekly chart, though I do doubt that the duration of the consolidation (if this plays out) will be anywhere near the length of the previous cycle. Looking at the chart, we can see the similarities in price-action, most importantly with price experiencing a similar follow-through in momentum following the close above the Weekly 20MA.

Now, looking at the LTC/BTC chart, unlike most other alts, it seems to me that Litecoin is running out of steam, having initially led the charge forward and doubled in price since December. RSI is showing bearish divergences and volume is declining at a significant area of prior support now turned resistance. I am expecting a move back toward 0.0125 BTC before any further upside.


XEL:

XEL/BTC

Price: $0.03 (785 satoshis)

Market Cap: $2.944mn (719 BTC)

Thoughts: Given the slowly shifting sentiment and reversion to bullish market structure on alts, I am becoming more and more open to taking positions purely based on technicals (as I showed with the ADT position I opened following Market Outlook #27)

Similarly, here I have spotted a high-reward, low-risk opportunity in XEL, cemented by the recent volume spike that saw almost a quarter of its supply traded inside a day, indicating significant interest. I am buying below 800 satoshis, with a soft stop-loss on a Daily close below 675 satoshis, with a target of 1500 satoshis. This is a ~6:1 reward-to-risk trade.

And that concludes this week’s Market Outlook. I hope you’ve found some value in the read.

As ever, feel free to leave any comments or questions below!


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Market Outlook #28

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


Market Outlook #28 (24th March 2019)

Welcome to the 28th Market Outlook.

Today’s post will be a little briefer than usual, as much of the market remains in consolidation – I’ll just be covering the past week’s price-action in Bitcoin, Ethereum and Monero, plus a quick update on Stratis.

Bitcoin:

Price: $4040

Market Cap: $70.887bn

Thoughts: In last week’s post, I mentioned that though short-term price-action was bullish, it is critical to remember the longer-term range price is currently trading within, and that we were coming towards the top of that range.

I was over-expectant in this short-term bullishness, anticipating a retest of $4300 this past week; instead, price found resistance a little early and dropped off towards $4000, with the ~$4025 prior resistance remaining support. In truth, there was very little movement at all over the past week, with price remaining inside a ~$130 range.

Looking at the Daily chart, we can see that volume remains flat whilst price trails the 20-day moving average, forming a short-term ascending triangle; a triangle that, if price continues to trail the 20MA, will conclude around the first week of April. In general, price tends to break upwards from ascending triangles, but range resistance lies waiting if this is the case.

Over the coming week, I expect more of the same, with little volatility and price continuing to trail the 20MA towards the conclusion of the ascending triangle. Perhaps towards the end of the week (and the month),  we will see a breakout.

If price breaks and closes below the current uptrend on the Daily time-frame, I’d expect a move back towards $3800 to follow. If price breaks out above the local high below $4300, I’d expect the range resistance at $4500 to provide the next area for consolidation. Short-term outlook remains bullish, however, unless we get a clean break of that 3-week uptrend on signficant volume.


Ethereum:

ETH/USD

ETH/BTC

Price: $137.84 (0.03427 BTC)

Market Cap: $14.523bn (3,611,743 BTC)

Thoughts: I completely underestimated the slowness of ETH over the past week, expecting price to make a weekly low around last Tuesday/Wednesday and see out the rest of the week with a move towards 0.036 BTC. Instead, we saw prices move towards the short-term range support above 0.034 BTC.

A similar pattern of price-action can be observed on the 4H ETH/BTC chart, with price running towards this support, breaking out above short-term trendline resistance and then returning to 0.0355 BTC. I expect we’ll see something similar play out over the coming week. This is all within a larger period of consolidation between 0.033 BTC and 0.036 BTC that I believe is setting Ethereum up for another move up towards 0.043 BTC in April. The only worry here is that ETH longs are at an all-time high on Bitfinex, and perhaps we need these shaken out before upwards momentum can continue. If this is to be the case, I’d expect the 3-week uptrend to give way on ETH/USD and prices to move back towards the longer-term uptrend at ~$125 – a fall of around 10%. This would imply an equivalent fall in BTC/USD if ETH/BTC is to remain within its current range.

Regardless, I remain leaning bullish on ETH going into April, and I believe what we will actually see is an upwards breakout from the ascending triangle that can be observed on the ETH/USD Daily chart.


Monero:

XMR/BTC

Price: $53.82 (0.01339 BTC)

Market Cap: $908.174mn (226,032 BTC)

Thoughts: We now approach 100 days range-bound for Monero; a vast period of consolidation that I believe indicates that Monero will be one of the outperformers of the next bull cycle amongst the ultra large-caps.


Stratis:

STRAT/BTC

Price: $0.94 (23415 satoshis)

Market Cap: $93.357mn (23,242 BTC)

Thoughts: The Stratis Weekly chart is a thing of beauty. Back in December, we saw a high-volume, explosive breakout above the long-term trendline resistance. Price has since experienced a low-volume pullback towards an earlier accumulation range, where it is being re-accumulated prior to a second leg up. I believe this second leg will take us towards prior support turned resistance at ~50k satoshis before the end of April. Beyond this, I expect to see prices reach for ~75k satoshis…

And that concludes this week’s Market Outlook. I hope you’ve enjoyed the read.

As ever, feel free to leave any comments or questions below!


If you’ve enjoyed this post and want to receive new posts straight to your inbox, I’ve set up a RSS-to-Email feed that will be sent out weekly; every Monday, 12pm. Just submit your email and I’ll make sure you’re included in the list. Cheers.

The Precedence of Price

AD: Before I begin this post, I’d like to briefly mention Bitcoin.Live, who are sponsoring my blog.

Bitcoin.Live offers regular, detailed content on their free-to-access blog, created by a panel of analysts (including Peter Brandt), and covering all manner of market-related topics. I found both the video material and the blog posts to be genuinely insightful, with many differing analytical perspectives available for viewers and readers. The platform also offers premium content for paying subscribers who find value in the free material, with daily videos, alerts and support provided. Check it out and bookmark the blog.


I’d like to preface this post by mentioning that this, unlike the vast majority of blog posts I publish, is expressly aimed at newer speculators, with little to no familiarity with markets.


The price paid for any asset is the single most important aspect of speculation, and one that largely determines the profitability of said speculation.

This idea is drummed into our heads by the most successful traders, investors and speculators of all time; and justifiably so.

Whilst investors like Warren Buffett refuse to acknowledge the long-term utility of technical analysis, relying solely on fundamentals in their decision-making process, they all – going all the way back to Benjamin Graham – make the concession that price is paramount. Price is both fundamental and technical in its nature, with all technical analysis deriving from two data-points: price and volume.

For the purposes of this post, we will be focusing on price, as it is the most critical component to your decision-making process.

Now, the problem with a sole reliance on fundamental analysis is that it often disregards the price-history of an asset. Whilst there are many valuation models in equity research that allow for a relative measure of cheapness to be determined, this is not the case with cryptocurrencies, at present.

In this space, we rely heavily on past prices for an indication as to the relative value of current prices. This is because fundamental analysis is very much in its infancy within the cryptosphere, and those valuation models do not yet exist, thus technical analysis is critical to prevent from overpaying for any given altcoin; an act that renders profitability highly unlikely.

A project might be impeccable in its fundamental quality, comprising of an engaged and growing community, consistent development, a working product and unique use-cases; but if you enter a position in that project at or near all-time highs, there is a strong chance that you spend a long time underwater or even realise a loss. Indeed, gravity is far greater a force within this particular asset class, and no amount of structural soundness will prevent the eventual (and cyclical) collapse.

As such, a study of price-history is indispensable when considering an entry for a new position. In fact, if you do nothing else in your research except study price-history, you will likely be doing enough to find some degree of success.

Now, this is all exceptionally simple; intuitive, one might argue. And so, I’ll refrain from rambling on any more. Rather, I believe it will prove useful to provide some examples of this concept of relative cheapness, if only to illustrate its simplicity.

First, consider all that has been said thus far. All we are looking for are periods of cheapness and dearness across price-history – in essence, we are reframing the concepts of support and resistance and simplifying them.

Below are printed the before-and-after charts of several coins. These are just a sample of the dozens and dozens of examples that are available in the market:

DOGE:

Dogecoin is perhaps the best possible example to illustrate this concept, as it has experienced numerous market cycles in its price-history. Looking at this first chart, intuitively, which prices look as though they are cheap and which look expensive?

Here, I have depicted my thoughts on this, where there is a price range of extreme cheapness, which has only been traded 4 times; a price range of cheapness, which has been traded 8 times; and a range of expensiveness, which has been traded 6 times.

Those that have bought within the extremely cheap range have been rewarded every single time with a possibility to sell within the expensive range. Those that have bought in the cheap range have been rewarded 5 out of 7 times with the same opportunity (excluding the current, 8th touch of this range) without experiencing price trade inside this range a second time prior to reaching the expensive range. To clarify this, look at the 2nd and 6th periods of price trading inside the cheap range: subsequent price-action took price up and out of the range but fell short of the expensive range, moving back inside cheap before making another (this time successful) run at expensive.

In all of Dogecoin’s price-history, buyers below 50 satoshis have been rewarded with an opportunity to sell above 100 satoshis, no matter when they decided to buy below this point.


STEEM:

Now, above is printed a STEEM chart, but I have excluded the first few months of price-history simply because it was an anomaly that massively distorts the chart. This is often the case when coins first begin trading, as circulating supplies are extremely low, drastically affecting early pricing.

Where, on this chart, would you consider price to be cheap and where is it expensive?

Clearly, there is one price-range that indicates relative cheapness across STEEM’s price-history. This range has been traded inside on 3 separate occasions. Each entry within this range has been reward with an opportunity to sell inside the expensive range except the most recent one, from which price is only just exiting. If we look between the 2nd and 3rd entries into the expensive range, we can see a failure for price to return to cheap, and thus bargain hunters would have missed this opportunity; a risk always present for those who adhere to the approach of buying at the very extremes of relative cheapness.


BCN:

BCN is an interesting case, as it spent a long time in a relatively tight price-range before experiencing several cycles in quick succession. Where would you consider price to be cheap for BCN, and where is it expensive?

Now, whilst this entire exercise is largely subjective and open to interpretation, BCN in particular is a trickier case. Whilst I doubt anyone would argue against there being a cheap range below 20 satoshis, I have marked out the area above it (between 30-40 satoshis) as relatively expensive rather than, say, less cheap or relatively cheap. That is because this range between 30-40 satoshis has only acted as a catalyst for a move towards the expensive and extremely expensive ranges once without price also moving into the cheap range. It has also acted as a range from which price has actually declined back into cheap without moving any further up on two occasions.

You might feel that this is actually still a relatively cheap range, and that is your call to make. For me, there is only one range that I’d be buying, and that is below 20 satoshis. Now, every single time price has traded within this range, it has been followed by at least a move up to 40 satoshis, with the more common pattern being a move up towards the expensive and extremely expensive ranges.

Price is currently trading inside the cheap range for the 5th time in BCN’s price-history.


SC:

Siacoin has a beautiful price-history, with very clear areas of relative cheapness and dearness. Looking at the above chart, where would you expect these to be?

Clearly, the range below 50 satoshis is extremely cheap; this range has only been traded within on 2 separate occasions. There is, however, a more recent cheap range that has formed just above it since around November 2017. Why is this range relatively cheap? Because it – like the extremely cheap range – acted as a catalyst for extremely expensive prices.

We have three gradations of dearness depicted, also. There is a relatively expensive range that has been hit 4 times in price-history; 3 of which have occurred after price has traded inside the cheap or extremely cheap ranges.


That concludes the examples, but I would advise you to go and seek out your own examples. The more you study and observe the entire price-histories of altcoins, the more you’ll spot periods of relative cheapness that can be capitalised on. Don’t make things difficult for yourself by seeking out opportunities in altcoins with obscure and clumsy charts; it is unneccesary when there are thousands of coins out there.

I hope this post has provided some insight for less experienced speculators.

As ever, feel free to leave a comment or question below and I’ll get back to you!