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 16th 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:
MONDAY: S&P GLOBAL COMPOSITE PMI (DEC): (CONSENSUS N/A VS PREVIOUS 54.9)
TUESDAY: US RETAIL SALES (MOM) (NOV): (CONSENSUS 0.5% VS PREVIOUS 0.4%)
WEDNESDAY: FED INTEREST RATE DECISION: (CONSENSUS 4.5% VS PREVIOUS 4.75%)
WEDNESDAY: FOMC PRESS CONFERENCE
THURSDAY: BOJ INTEREST RATE DECISION: (CONSENSUS 0.25% VS PREVIOUS 0.25%)
THURSDAY: BOE INTEREST RATE DECISION: (CONSENSUS 4.75% VS PREVIOUS 4.75%)
THURSDAY: US GDP ANNUALIZED (Q3): (CONSENSUS 2.8% VS PREVIOUS 2.8%)
FRIDAY: US CORE PERSONAL CONSUMPTION EXPENDITURES (MOM) (NOV): (CONSENSUS 0.2% VS PREVIOUS 0.3%)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $104,534
Weekly:
If we begin by looking at BTC/USD on the weekly, we can see that price wicked below the $99k resistance level last week, finding support and ultimately pushing higher into the weekly close, rallying to fresh all-time highs beyond $104k and closing out the week at $104,445. Momentum continues to look supportive on this timeframe but volume is diminishing a tad. Despite this, given the strong weekly close at fresh all-time highs through multi-week resistance, I am expecting another leg higher to begin from here, thereby breaking the 11-week lagged liquidity correlation highlighted last week, which called for a multi-week correction beginning over the past few days. The reason for this is simply that we have a clear sign of acceptance above a psychological figure and a key resistance level, pushing BTC into price discovery. Whilst the liquidity proxy has been around 90% correlated since January with that 11-week lag, correlations obviously do not last forever and there are periods in which Bitcoin trades at a much weaker correlation to liquidity, if not entirely uncorrelated. I expect we are entering one of those periods here and we should now begin the ascent towards a major confluence of resistance around $125k, where the 200% extension of the bear market and the 300% extension of the 2024 range are sat, along with the 350dMA x2 (the Pi Cycle Top MA). The only caveat to this would be if we were to take out $107k early this week and reject, pushing lower post-FOMC into a weekly close back below $104k, which then looks like a deviation of the previous high. In that scenario, it is possible we do get that multi-week correction playing out and the correlation persists with a slightly longer lag than has been present most of 2024. This, however, is not my base case, to be clear. Obviously, we will get a correction at some point, but I think it is now more likely to come from that $125k area in early 2025.
Daily:
Looking now at the daily, we can see how following the breakdown below trendline support on momentum last week, we swiftly reclaimed that trendline as price pushed higher, which could be an early indicator that this breakout has legs. RSI has now reset on the daily with plenty of room to the upside for that next leg higher and AO is starting to turn higher too, supporting our view on momentum here. That said, looking at price-action, whilst we do have bullish structure on the daily, we want to see $99k act as support early this week should we get a dip, with any acceptance below that level looking very weak indeed, following which it becomes much more likely we take out $91k, in my opinion. If $99k holds as support going into FOMC, and we don't take out today's high at $106,554 prior to that, that's a very good setup for expansion to the upside. $125k is the target should that begin to play out. Should we deviate into $107k and then rug pull after FOMC back below $99k, I am looking at $88k as the next major support.
Now, looking at the hourly, we have to really clean setups that could form over the next few days for both the short side and the long side.
For longs, you really need to see $106,554 left untouched, with it having formed in that early period after the weekly open. That sets it up as a magnet to be revisited later in the week, almost exactly as last week played out. We want to see derisking into event risk, which is FOMC this Wednesday, ideally taking out the Saturday low at $100.6k into that confluence of trendline support, 200hMA and 360hMA above $99k. We should then see a sharp reversal after headline risk is behind us into the weekly close, through $107k and beyond:
On the short side, you want to see that $106.5k high taken out as price grinds higher into Wednesday, baiting breakout longs into event risk, following which if we see acceptance back below $106.5k we could look to open half size and add on a move back below the weekly open at $104.4k, looking for $99k to be retested at the minimum, but given how that will begin to look from the perspective of the weekly timeframe, it's likely that would be the beginning of a deeper correction into the New Year:
Below, we can see a snapshot of positioning via Velo and CoinGlass, with an aggregate spot basis having returned over the past few days along with neutral funding, supportive of higher prices:
And here is the 3-month annualized basis, which remains around 15%:
And finally, the 1-week and 1-month anticipated liquidation levels, which may act as a magnet should price trade towards them:
Ethereum:
Price: $3944
ETH/USD
Weekly:
If we begin by looking at the weekly for ETH/USD, we can see that last week actually marginally wicked below the prior weekly low into resistance turned support at $3460, bouncing hard to push back above trendline resistance turned support and close back near the 2024 highs, around $3957. We are now consolidating right below that $4100 level, above which we likely teleport into $4400 as the final resistance level before retesting all-time highs at $4900. Momentum and structure are supportive of higher prices here on this timeframe. If we get a weekly close above $4100 this week, I think we trade $4400 next week and $4900 going into January, with price discovery beyond that during the seasonally most bullish period for Ethereum. As long as we hold above $3460, this remains bullish.
Daily:
Now, looking at the daily, we can see how price swept support at $3600 below the December open towards $3460, front-running that resistance turned support and forming a higher-low above prior trendline resistance. Since, price has v-reversed higher back into resistance around $3973, where it is currently consolidating, with choppy momentum. Nonetheless, daily structure is still bullish here and should we sweep the weekend lows and then accept above $4100 going into next week, that will likely lead to another leg higher into $4400. If we deviate $4100 this week and then accept below $3973, that would look short-term bearish and lead to another sweep of last week's lows into $3460 and potentially lower before retesting those 2024 highs again.
ETH/BTC
Weekly:
On the weekly timeframe for ETH/BTC, we can see that price is now consolidating between resistance turned support at 0.0365 and reclaimed resistance around 0.0417, with 0.0403 capping the weekly closes of late. Momentum is beginning to turn higher, supportive of a more sustainable reversal, but we need to see that weekly close through 0.0417 to turn weekly structure bullish, thus opening up what is likely to be a swift reversal into the 0.049 area going into early 2025. Close the weekly back below 0.0365 here and it looks more likely that we need to take out the lows again before another reversal attempt.
Daily:
Turning to the daily, I have marked out how I expect the next few weeks to play out for ETH/BTC given the recent price-action, market structure and seasonality. We should hold here above 0.0365, or any move below that level into the trendline should immediately be followed by a reclaim of 0.0365 as support. From there, we should see 0.0403 flipped as support and 0.0417 give way soon after as price moves towards a 200dMA retest, with acceleration on acceptance above that MA towards 0.049. This scenario is invalidated if we flip 0.0365 back into resistance.
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Gold:
Price: $2659
Weekly:
Looking at the weekly, we can see that Gold rejected last week at $2727 resistance, but held firm above trendline support, continuing to consolidate and grind higher between these two in something resembling an ascending triangle. The picture thus remains the same as last week, whereby we should see any weekly close through $2727 lead to another leg higher through the all-time high at $2793 and beyond towards $3000; whilst any close below trendline support leads to a retest of $2535 as support but also puts in a lower-high, thus making it more likely the mid-term top is in here and price is likely to continue to correct towards the next trendline and $2430.
Daily:
Looking now at the daily, we can see these two trajectories I had marked out a few weeks ago, with the more bullish one currently playing out as we form higher-lows above that trendline, but acceptance above $2727 as resistance turned support is the signal bulls should be looking for. There is nothing particularly clear to be gleaned from momentum at present but if we see daily RSI push back above 60 as price accepts above $2727, that would look very much supportive of that next leg higher. Let's see how this next week plays out but there's every chance this is just another week of consolidation before a breakout in either direction next week...
Dollar Index:
Price: 106.66
Weekly:
Beginning with the weekly for DXY, we can see that last week was strong for the Dollar, flipping 105.5 into support and pushing off the weekly open back into the 2023 high at 107, below which it is currently sat. This is pretty much last chance saloon for this range to continue capping the Dollar, and perhaps we see some of this dollar strength unwound post-FOMC, but from a structure POV this now looks like it wants to break out of the range and push through 107.7 towards 109, which may act as a headwind for risk assets later down the line as financial conditions tighten. If, however, this is a bull trap leading into this week's event risk, we should see 107 continue to cap the Dollar and then price break cleanly back below 105.5 into the weekly close, leading to continuation lower into year-end.
Daily:
Looking now at the daily, we can see that momentum remains below that broken trendline making a lower-high beneath it, whilst price retests trendline support as resistance from below, capped by the 2023 high at 107. As such, we have very clean structure for either continuation or reversal: accept back above 107 and above that trendline on RSI and that's a pretty clear signal for the strength that lies ahead for the Dollar; put in a lower-high here and then close below 105.5 and daily structure turns bearish as momentum breaks down, which is the cleanest setup for a leg lower into 103.7. Big week ahead...
Others:
Price: $396.1bn (3.77mn BTC)
OTHERS/USD
Weekly:
Beginning with the weekly for OTHERS, we can see that the altcoin market closed firmly above trendline resistance from the all-time high through the prior 2024 highs, retesting it as support last week during that liquidation event and holding above it to close out the week at $406bn. We are now consolidating below that final level of resistance for alts at $420bn, above which only the all-time highs remain at $492bn. We may see another week or so of consolidation here but structure and momentum are firmly bullish and I am expecting continuation through $420bn going into 2025, where we likely break through all-time highs early in January. Only a weekly close back below last week's low and below that trendline would begin to look more troublesome for the coming weeks, in my view.
Daily:
Looking at the daily, we can see how alts closed above resistance at $420bn before that liquidation event, but found support at prior resistance around $367bn despite attempting to break below it three days in a row. We then pushed back into $420bn and are now consolidating below it. Whilst this is currently a lower-high formation, daily structure is still bullish here and we should only turn short-term bearish if we accept below $367bn this week, below which we are likely to get another flush through last week's low towards $301bn before a bottom is found. If we do get that more bearish scenario short-term, that is likely the best opportunity for the coming months. If, instead, OTHERS continues to find support above $367bn and just chops around a bit more before acceptance above $420bn, then the next move is testing the all-time high at $492bn, above which is that short-lived but euphoric period of price discovery.
OTHERS/BTC
Weekly:
Looking at OTHERS/BTC, we can see how altcoins pushed higher vs BTC into 4.35mn BTC before rejecting, selling off from the weekly open last week back into reclaimed support at 3.6mn BTC, above which it is currently sat. Weekly structure is bullish and momentum is supportive of continuation higher. If we see alts dip below that 3.6mn BTC area back towards 3.275mn, that would very much look like an opportunity to add exposure before the next leg higher through 4.35mn towards the 2024 highs and 200wMA at ~5mn BTC. Alts generally should outperform BTC for the next few months, as long as we don't close below the ~3mn BTC level, thereby undoing all of this structure and momentum.
Daily:
Looking at the daily, we can see my original trajectory for OTHERS/BTC from November that played out pretty much perfectly into 4.35mn BTC, and if alts are able to hold above 3.6mn BTC this week then I expect continuation higher next week through 4.35mn towards 5mn into January. If, however, we need to see one more flush lower first, then we should sweep last week's low into the 200dMA at 3.465mn BTC and then reclaim 3.6mn BTC as support over the next week or two, before continuation higher late in Dec and through January towards February. No reason to be bearish alts vs BTC for more than a short-term flush unless we turn the 200dMA into resistance again, below which it is becomes a little less clear, with daily structure turning bearish...
And that concludes the final Market Outlook of 2024!
I hope you've found some value in the read this week (and throughout the past few months). I'll be back in early January with the first Outlook of 2025.
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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