This blog references an opinion and is for entertainment and informational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
In this tenth Market Outlook here at Ostium Research, we'll be taking a look at the week ahead in markets, focusing specifically on price-action, positioning and event risk for Bitcoin, Ethereum, Gold, the Dollar Index and altcoins via OTHERS.
Firstly, let's take a look at the calendar:
As I'm sure we're all aware, this is a very big week for markets. We have the US Election front and centre, but shortly thereafter we have FOMC amidst a number of other key data releases:
TUESDAY: US ELECTION
TUESDAY: ISM SERVICES PMI (OCT) (CONSENSUS 53.3 VS PREVIOUS 54.9)
THURSDAY: BANK OF ENGLAND INTEREST RATE DECISION (CONSENSUS 4.75% VS PREVIOUS 5%)
THURSDAY: FEDERAL RESERVE INTEREST RATE DECISION (CONSENSUS 4.75% VS PREVIOUS 5%)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $68,526
Monthly:
If we begin by looking at the monthly timeframe for BTC/USD, we can see that October closed very strong indeed, as the second-highest monthly close of all time at $70,198. We bounced off support in October at $58.8k, marking out the low and then continued through prior resistance at $65k and $69k into an all-time high retest at $73.6k before ultimately closing below that level, leaving a clean double top at the highs. Given the strength of this close, it looks highly probable that November sees those all-time highs breached beyond $74k, where of course the reaction will be key for continuation or deviation. As long as we hold above $65.3k this month, however, the picture does look very strong for the coming months. Close November below $65.3k and it is likely we retest $58.8k subsequently.
Weekly:
Turning to the weekly, we can see that following the week of consolidation around $69k resistance, price wicked higher early last week to retest those all-time highs, marking out that clean double top but ultimately rejecting a breakout, retracing following the monthly close to close the week back near the open and right back at $69k resistance. This is, in my view, largely noise, where the October close was signal, given the context of the week ahead. What bulls don't want to see here is momentum to the downside following this weekly close, with a close back below the trendline breakout. As long as price holds above that area, this still looks constructive for another attempt at highs soon. A weekly close firmly above $69k would open up that retest next week, but if bulls are particularly strong post-election and that uncertainty resolves to the upside, we could see $74k closed above this week; in that scenario, we would expect continuation higher towards $80k over the coming weeks.
Daily:
Finally, looking at the daily timeframe, it's important to note that despite the correction following the all-time high retest we have no signs of trend exhaustion on momentum indicators; if anything, we have some hidden bullish divergence beginning to form on RSI with that lower-low print on momentum but the higher-low formation on BTC/USD. If this locks in over the next couple of days - and the election is won cleanly by either candidate - there is a high probability that Bitcoin just pushes higher into that $74k region again. Looking at price-action, we rejection $73.8k, retraced back below $70k and over the weekend wicked back below prior resistance at $68.9k, which could now begin to act as support. Given the volatility of the week ahead, if we do keep retracing lower from here, we could push deeper into this demand zone above $65.2k; unless we close below that level, however, daily structure is still bullish. If we mark out a higher-low above that level this week and then flip $70k as resistance turned support, that's looking good for another test of the highs.
Now, looking at potential setups on the hourly for the week ahead, the price-action is likely to be very noisy over the next 48-72 hours at least, so take these with a pinch of salt.
If we're looking for a short trigger, we would want to see a push higher early this week into the Election, taking out $70k stops and then rejecting and closing back below post-Election, where it becomes likely we then take out the weekend lows into demand around $66.6k before any clear resolution:
On the long side, if we see no upside early this week, with trendline resistance continuing to cap price and weekend highs remaining intact, a flush of $67.4k into demand followed by a reclaim of $67.4k as support post-election would be a nice opportunity to jump half size in, adding the remainder on a reclaim of the weekly open for a run at all the untapped highs all the way into $74k:
And here is a snapshot at positioning on Velo and CoinGlass, with last week basically looking like it never happened in relation to open interest and basis:
And finally, here are the expected 1-week and 1-month liquidation levels that could act as a magnet if price draws closer to them:
Ethereum:
Price: $2451
ETH/USD
Monthly:
Beginning with the monthly view for ETH/USD, we can see that October was another consolidation month, with price continuing to find support above this significant cluster but failing to breach $2850 resistance. We are now chopping sideways through this trendline support from the cycle lows, and November needs to see a close through $2850 to not begin to look like this is trendline support turning resistance. As mentioned previously, as long as we are holding above the 2024 open at $2280, I don't think there's a high probability of bearish continuation, particularly given how BTC looks, but there is also nothing super bullish about this until it reclaims $2850. Above that level, clear skies into all-time highs on the monthly timeframe.
Weekly:
Looking now at the weekly, we can see that the 200wMA continues to act as support at $2370 and price keeps forming higher-lows after rejecting at over head resistance, but in reality this is just brutal choppy sideways price-action with no clear signal as of yet. We remain above trendline support, the 2024 open and the 200wMA but remain capped by local trendline resistance and the Q4 open at $2600. Acceptance above or below these two clusters will dictate the direction after such a long period of consolidation. If we can close and hold above the Q4 open, we retest $2850, but if we accept below $2280 we take out $2158 with literally zero major support below that into $1756, so in that scenario ETH bulls would need to pray for a deviation and reclaim of that yearly open. If you want the highest probability of continuation higher, just wait for $2850 to be flipped as support.
Daily:
Turning now to the daily, I have marked out what I anticipate will be the most likely trajectory from here, assuming we get a clean outcome to the election and thereby do away with the uncertainty over the next few days. It is likely we see some sort of final flush of these built up lows into the yearly open before a reversal back above the November open at $2514, followed by continuation higher into that $2730 level later in November and a breakout attempt at $2850 as we head into December. Obviously, this does not have to play out precisely in this manner, but given how many stops have been building up over the past couple of months above the yearly open and the proximity to the level during a volatile trading week, if ever we were to see a final flush before a reversal it would be now. If, instead, we get through mid-week holding these higher lows and begin to flip that $2514 level as support post-election, bulls might have escaped relatively unscathed, but we'd need to see the Q4 open turn support to really be sure that these lows will remain protected. Unless we see acceptance below $2280, it does not make sense to be super bearish here, in my opinion.
ETH/BTC
Monthly:
Looking at the monthly for ETH/BTC, this is truly atrocious, with 0.0417 acting as resistance in October and the monthly closing at the lows marginally below 0.0365. Given the weakness of the October close and no wick into the lows, we can expect November to form the wick if we are due to form a bottom, but given there is no major support all the way down into 0.03 this could continue to be bloody. If we wick below last month's low towards 0.03 but front-run that area and start pushing back above 0.0365, that would look very much like a bottoming formation, where a monthly close above 0.0365 would confirm that assuming we get the deep wick. The highest probability for continuation higher and a cycle low comes when we reclaim 0.0417 as support.
Weekly:
Turning to the weekly, there are no signs of trend exhaustion despite the beating ETH bulls have taken, and weekly structure remains bearish. Last week closed below 0.0365 and there is nothing to suggest that was the bottom; as mentioned last week, it is likely we do not see an ETH/BTC bottom form until BTC/USD is clear of all-time highs at $74k, at which point there is renewed confidence in the market for broad continuation higher and animal spirits return. No confirmation of a bottom on this timeframe until we either see bullish divergence validated (which is nowhere near forming yet) or a reclaim of 0.0417.
Daily:
Turning to the daily timeframe, I have marked out these two potential scenarios, where if BTC can accept at new all-time highs in the next week or two we see a wick below 0035 followed by a reclaim of 0.0365 and then a breakout beyond local trendline resistance before December; or if BTC continues to chop below highs or retraces further we likely see a deeper capitulation towards 0.03 later this month before a sharper reversal occurs. Nothing too promising at all for ETH bulls just yet...
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Gold:
Price: $2733
Monthly:
If we begin by looking at Gold on the monthly view, we can see that October was incredibly strong for it, pushing it to fresh all-time highs at $2790 before closing at $2745 on growing volume and momentum. There is quite literally nothing bearish about this chart at present on this timeframe and Gold continues to march towards that huge $3000 level we've been eyeing up for quite some time now. One can expect continuation higher in November towards that level, where this only turns bearish if we take out the October highs, reject and close November back below $2790, at which point we may have a mid-term top forming.
Weekly:
On the weekly timeframe, however, despite continued growing momentum, we did have a bearish reversal candle close last week as price rejected all-time highs and closed out below the weekly open, so we could see continuation lower this week into $2693 as resistance turned support. If that level holds, I would expect that wick to get filled in and price to continue through those all-time highs over the next couple of weeks. Now, if we close this week below $2693 and confirm a weekly swing-high, then it becomes probable price returns to test that more recent trendline support, potentially as low as $2600. Again, there are no signs of trend exhaustion on this timeframe and dips remain buying opportunities whilst the higher timeframe trend persists.
Daily:
If we drop into the daily, we can see that there are finally some signs of trend exhaustion on this timeframe, with the most recent push into all-time highs forming bearish divergence. Price is now pushing lower towards that resistance turned support at $2690 and towards the most recent trendline support from the August lows. Bears can begin to get a bit more excited if this support cluster fails to hold and price accepts below both $2690 and trendline support, as we then have a parabola break on the daily and structure turning bearish, where we would then expect to see the second trendline retested as support back into $2600, as mentioned above, assuming the move below $2690 does not get invalidated with an immediate reclaim as support. If, instead, this area above the trendline holds as support, this bearish divergence gets invalidated pretty swiftly and we continue higher towards that massive $3000 level.
Dollar Index:
Price: 103.5
Monthly:
Looking at the monthly timeframe for the Dollar Index, we can see that the Dollar had a strong October, bouncing off the monthly open at range lows around 100 and pushing into resistance at 103.7, wicking above but closing below, and now consolidating at that level. Monthly structure is still bearish here and the highs remain capped by trendline resistance, so there is no expectation just yet that last month's strength will lead to continuation through 105.5 as major resistance. Rather, momentum supports the idea that this is a downtrend and if last month's high and trendline resistance caps November, we should see continuation lower from here back towards the yearly open and range lows into year end.
Weekly:
Turning now to the weekly view, we can see that price is rejecting around that all-important 103.7 area I have had marked out for months - and where I mentioned we should see the short squeeze capped before continuation of the downtrend. Right now, it looks like a deviation above that level that could be confirmed if we close this week below 103.3. If instead we see demand step in here and 103.7 turns support into the weekly close, then we should see last month's high taken out into trendline resistance, where Dollar bears would need to step up. For now, this very much looks like the formation of a lower swing-high before continuation lower.
Daily:
Finally, looking at the daily timeframe, we can see how price spent some time consolidating above that cluster of anticipated resistance before rejecting and now turning lower, where we should see acceptance below 103.3. If we see that and the level is reclaimed as resistance, then the subsequent direction is pretty clear, with 101.9 as the first major support to be retested. As long as we do not accept above 103.7 as resistance turned support, I am expecting this next leg lower to begin fairly soon, ultimately leading to a yearly open retest at 101 into year-end.
Others
OTHERS/USD
Price: $197.5bn
Monthly:
Looking at the monthly timeframe for OTHERS, we can see that the altcoin market remains capped by major resistance at $227bn, despite a strong September. October was capped at that level and the market consolidated below and we are now seeing some rejection as OTHERS moves below the October lows. If we see this move below the October lows reversed early this month and the altcoin market begin to push back above $227bn, that's your signal that the next leg higher is beginning, confirmed by a November close above last month's high, following which it is likely the next few months leads to a retest of the all-time highs. If, instead, the altcoin market remains capped by $227bn this month and closes below the October lows around $200bn, we may need another test of the $150bn area into that $130bn major support before a bottom is found. My expectations are strongly weighted towards the former scenario given the combination of seasonality of the next 3-6 months, expectations for continuation higher in the business cycle and the monthly picture for BTC/USD.
Weekly:
Looking now at the weekly, we can see that momentum has dipped lower but continues to look like it is bottoming out, whilst the altcoin market is sat on the 200wMA having wicked into support. We are sat right around the parabolic curve here, so a weekly close below $181bn would invalidate this current parabola, which is something to keep an eye on. If, instead, we wick below this area into $180bn and the market catches a bid there and push back above $200bn, that would very much look like the final bear trap before continuation higher, where a weekly close above $237bn is the beginning of 'easy mode'. Weekly structure is still bullish here as long as OTHERS does not close the weekly below $181bn, but ideally it holds around the 200wMA as support and pushes higher from here into December. If we do get the bearish scenario and we close below $181bn, it is likely a lot more consolidation is needed before another attempt is made at that $227-237bn resistance cluster.
Daily:
Looking at the daily, I have marked out what I think is the probable path ahead post-election, with a final flush lower into $181bn followed by a reclaim of $200bn as support and a subsequent retest of resistance at $227-237bn going into December, above which we have clear skies for continuation into year-end and beyond. If we see acceptance below $181bn we can expect to see another 20% flush lower into $150bn, which would be brutal indeed across the board.
OTHERS/BTC
Price:
Monthly:
If we begin with the monthly for OTHERS/BTC, we can see the general cadence of the altcoin cycle quite clearly here, with this being the first cycle in which the initial bottom (here meaning the 2023 low) has been taken out post-halving. This is likely why this cycle will feel particularly brutal for those that only hold alts, as the market is now trading below the 2023 lows vs BTC. In my view, this is very much a bear trap scenario as the market awaits confirmation of all-time highs for BTC/USD. Nonetheless, the altcoin market is sat right at historical support and we may see a wick below this area in November as BTC accepts above $74k followed by a reversal and a November close back above ~3mn BTC, which would be the signal for a sustained reversal. If we close November below this level and flip it into resistance, there may be a lot more blood to come for alts vs BTC, as there is no support for another 50% move lower back towards the December 2020 lows.
Weekly:
Turning to the weekly, we can see the beginnings of trend exhaustion into this low though by no mean confirmed yet, but if we do see one final push lower for OTHERS/BTC and a subsequent reclaim of that ~3mn BTC level as support, that would very much look like a bottom in my view. We got the fake-out above trendline resistance in September that led to this move below the 2023 lows, so we can expect a second move above the trendline and above ~3mn to be the 'real' move. If we reject below ~3mn and remain capped by the trendline later into November, there is a long way down to go before we can start looking at an altcoin bottom vs BTC.
Daily:
And finally, looking at the daily timeframe for OTHERS/BTC, we can see how brutal this move has been since losing 3.275mn BTC as support, with a straight flush lower back below trendline resistance, some consolidation at range lows and then a bleed through 2023 lows into no man's land. Alts are the most oversold now since that June 2023 bottom but there are no signs of trend exhaustion on this timeframe just yet. Instead, I maintain that this is the altcoin market indicating that it anticipates new all-time highs for BTC soon, thereby selling off in anticipation (particularly in the context of the tumultuous week ahead) and much of this selling will be reversed post-election and post-acceptance above $74k for BTC/USD. We will likely see a final wick lower as BTC pushes into $74k, and then a v-reversal as tends to be the altcoin signature once we find acceptance above that level.
I hope you've found some value in the read this week.
Oh, and if you've not tried out Ostium yet, you can now do so here with the launch of their public mainnet.
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