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!


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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!

Market Outlook #27

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 #27 (17th March 2019)

Welcome to the 27th Market Outlook; and what a week we’ve had. Across-the-board, we’ve seen continuations of bullish reversals, along with some periods of relief for altcoins that have already moved above and beyond their accumulation ranges. Critically, however, we have seen the market as a whole break above the 15-month downtrend that has been capping prices since January 2018, as can be seen from the chart printed below:

Despite the steadily rising volume and the breakout above trendline resistance, it is important to remember that we remain range-bound for the time being, until Total Market Cap closes above ~$145bn. Further, we still have half a day to go before we can look at the Weekly chart to see if we’ve closed above trendline resistance on that timeframe; for now, the Daily does look bullish for the market, overall.

Now, today’s post will be a little longer than usual, as I’ll be covering the past week’s price-action in Bitcoin, Ethereum and Monero, as well as providing an update on Dash and Ubiq and breaking down the opportunity present in adToken.

It’s a lot to get through, so let’s crack on:

Bitcoin:

Price: $4070

Market Cap: $70.937bn

Thoughts: In last week’s Market Outlook, I mentioned that BTC would need to break above $4050 on high volume to confirm a return to bullish market structure on the 4H, as well as an indication that a retest of the local high at ~$4300 was imminent.

This past week, we saw a bullish continuation of the momentum from the previous week on significant volume, with prior resistance now at $4070 now looking like support. Trendline support remains intact on the 4H, as does the 200MA acting as support as price continues to trend upwards.

That said, it is important to remember the range we remain within, which is why I’ve provided the Daily chart. Until we get a Daily close above $4400 on solid volume, it is wise to assume the range will remain in play, and thus there may be significant overhead resistance this coming week. I do believe we’ll retest the $4300 high from last month over the next few days; whether we close above it is not something I’m all too certain on. Perhaps we’ll need to consolidate around that high for a while before breaking above it with any serious momentum…


Ethereum:

ETH/USD

ETH/BTC

Price: $140.28 (0.0348 BTC)

Market Cap: $14.767bn (3,672,639 BTC)

Thoughts: Looking at the Weekly chart for ETH/USD, we can see that price is breaking above the 20-week moving average for the first time since February 2018. Price rejected a move above it a couple of weeks ago, but now looks set to close above it. We can also see from the period prior to 2017 on the chart that a Weekly close above the 20MA preceded the subsequent 12-month bull run.

Looking now at ETH/BTC, the successful retest of the 200-day moving average has been completed, with price now looking to break above 15-month trendline resistance. A higher timeframe close above this trendline would indicate to me that the local high (and support turned resistance) around 0.042 BTC will be retested and likely broken above. However, looking at the 4H, price remains range-bound between 0.034 and 0.036 BTC, recently rejecting a move above the 200MA. That being said, I expect a reclamation of 0.0352 BTC on the 4H early this coming week, with bullish continuation towards range resistance by the Weekly close.


Monero:

XMR/BTC

Price: $53.26 (0.1325 BTC)

Market Cap: $897.888mn (223,360 BTC)

Thoughts: We are now 3 months into range-bound accumulation for Monero, but this past week saw higher 24H volume than any during this period. Short-term support has formed at 0.0125 BTC but price remains capped by range resistance at 0.0136 BTC.


Dash:

DASH/USD

DASH/BTC

Price: $91.26 (0.0226 BTC)

Market Cap: $793.292mn (197,784 BTC)

Thoughts: A few weeks ago, I broke down Dash’s price-history in a Market Outlook, mentioning that it seemed to be setting up for a bullish reversal, similar to Litecoin’s. This past week, we saw Dash break out of its consolidation on significant volume, but price remains capped by the 200-day moving average. The last couple of days have seen price pull back on low volume, and I’d expect this pullback to be followed by a break above the Daily 200MA towards an area of support turned resistance at 0.025 BTC.


Ubiq:

UBQ/BTC

Price: $0.25 (6215 satoshis)

Market Cap: $10.621mn (2,648 BTC)

Thoughts: Ubiq looks set to close the Weekly above trendline resistance for the first time in 15 months, having already broken above this key resistance on the Daily with significant volume. Price has reclaimed prior support at 5000 satoshis (an important psychological figure) but remains capped, as is the case by many altcoins at the moment, by the Daily 200MA. A close above this level would open up a move towards long-term resistance at 10,000 satoshis – another important psychological figure.


adToken:

ADT/BTC

Price: $0.007 (173 satoshis)

Market Cap: $4.16mn (1,035 BTC)

Thoughts: Whilst combing through charts this past week, I spotted this beauty. I have no idea about the fundamentals of adToken, but there is clearly significant interest at current prices and those prices happen to be near all-time lows. With the changing tide in the market at the moment, I have decided to take my first solely TA-based position in many, many months.

From the ADT/BTC Weekly chart, we can see that price is range-bound between its all-time low at ~130 satoshis and range resistance at ~260 satoshis. This range preceded the move towards 2400 satoshis in January 2018.

Now, looking at the Daily, we can see that the range has been in play for 214 days, which is insane. There have been frequent buy-ups during that time. Regarding a trade, I have entered at current prices, with a soft stop on a Daily close below 120 satoshis and a first target of ~550 satoshis. Let’s see how this one plays out…

And that concludes this week’s Market Outlook. If you’ve found some value in the read, please do share it on Twitter etc. and 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.