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 18th 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, Copper and the Dollar Index.
Firstly, let's take a look at the calendar:
TUESDAY: US PRODUCER PRICE INDEX (MOM) (DEC): (CONSENSUS 0.3% VS PREVIOUS 0.4%)
WEDNESDAY: US CONSUMER PRICE INDEX (YOY) (DEC): (CONSENSUS 2.8% VS PREVIOUS 2.7%)
THURSDAY: US RETAIL SALES (MOM) (DEC): (CONSENSUS 0.5% VS PREVIOUS 0.7%)
FRIDAY: CHINA GDP (YOY) (Q4): (CONSENSUS 5.1% VS PREVIOUS 4.6%)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $92,724
Weekly:
If we begin with the weekly view for BTC, we can see that price swept the previous week's high into resistance at $102k and rejected last week, closing back below $99k resistance, which was precisely the bearish scenario outlined in last week's post. This makes it a high probability that we see $90k support taken out this week, where the reaction will be telling. A weekly close below $89k looks no bueno for short-term bulls, with no support beneath that level back towards $74k - at least on the weekly timeframe; conversely, sweeping this multi-month support with a deep wick that culminates in significant long liquidations and then reclaiming the support would be precisely the setup we're looking for for the next leg higher. It would not be too dissimilar to the price-action of January 2024. At the bare minimum, I think it is likely $88k gets tagged either way this week, which is a confluence of support including short-term holder realized price and the value area low since the Trump election. If we sweep range support into that level (and potentially below it) early this week, I think that sets us up for a reversal later on in the week; pushing below it late in the week is less favourable as it becomes more probable we close the week below that. That being said, as highlighted on X last week, if we do close below the 'neckline' of what people are framing as a H&S here, that itself could bait a lot of breakdown shorts, which in turn can provide fuel for a reclaim of support and reversal off that level, particularly going into Trump's inauguration next Monday. It gets said a lot, but truly a big week ahead...
Daily:
Turning to the daily, we can see how price has been consolidating around the 2025 open at $93.3k for the past few days, now looking to push below it, with momentum having rejected below that trendline. This suggests that the blow-out of range support is almost inevitable - we should see $91k taken out early this week, where once again the reaction will be telling. Acceptance below $91k and flipping that level as resistance into the weekly close would be suggestive of a deeper correction towards the trendline. What I will be paying attention to this week is positioning pre-and-post inflation prints going into the latter half of the week - if we have blown out $90k and shorts have aggressively opened up with headline risk in the rear view, a reversal from Wednesday onwards will be more probable; if instead we see longs aggressively opening up and no real liquidation event below $91k, that would suggest further pain to come. Structurally, either wicking or closing below $91k and then reclaiming that level as support would be the first stage of a reversal, where we would then want to see the 2025 open acting as support to make the move below $91k look like a deviation going into the rest of what is historically a period of strong seasonality.
So, looking at the long side, we set the high of the week in the first half hour of the weekly open, which I tend to be skeptical of, but we did marginally wick the Friday high on perps; nonetheless, that $96k level looks like a perfect first target for a long should we get the setup. What I would be looking for is continuation lower early this week leading to a capitulation wick below $89k going into Wednesday, with $89k then act as support after all inflation data is out; this would be entry one to put on some notional, adding on a reclaim of $93.3k as support, looking to exit the majority above $102.7k given that that was the swing-high that has led to this drive lower:
On the short side, we want to see stops continue to build up early this week above $90.7k and price take out $95.8k into Wednesday, looking for an entry back below the weekly open at $94.5k and anticipating that major flush below $89k to follow. I think this is much less probable and we are more likely to see the former setup unfold:
And here is a snapshot of positioning across Velo and CoinGlass, with a growing spot premium, near-neutral funding and OI back near range lows:
3-month annualized basis, however, is back at pre-Trump pump levels despite price being $25,000 higher:
And here are the 1-week and 1-month anticipated liquidation levels:
Ethereum:
Price: $3146
ETH/USD
Weekly:
If we begin by looking at ETH/USD, we cam see that last week printed a bearish engulfing, rejecting at $3750 to close the week firmly back below trendline resistance and $3470 resistance at $3266, currently holding above reclaimed support at $3050. That said, given our expectations for BTC, it is very much likely that support gets swept here into $2850 as the major untested support cluster from the November breakout, where we should see demand step in if this structure is to remain mid-term bullish. Closing back below $2850 on the weekly would look ugly but also not present much by way of risk/reward to the downside given the long-term trendline support below that, which has held up since mid-2022. Below $2850 we no doubt would be retesting this trendline, where any weekly close below would obviously indicate a long-term trend change. For now, however, we should anticipate $2850 to form a higher-low, particularly in the face of the most seasonally bullish 90-day period for ETH. Weekly momentum is now looking very choppy here though there are no signs of momentum exhaustion on this timeframe.
Daily:
Right, looking at the daily I have marked out what I believe is the highest probability outcome going into February from here, which is to capitulate below $3050 this week, form a low around $2850 and then reclaim $3050 as support, which would make for a higher probability long entry for the next leg higher back into $4100 and beyond. Despite the elevated levels of fear in the market at present, nothing to me suggests we do not get a reversal of this early 2025 correction going into the end of Q1. Daily structure here is bearish, as is momentum, which supports the idea of that deep flush of support; the fact that this is also likely to occur below the 2025 open, the week before Trump's inauguration and with inflation data out this week gives me greater confidence that at the very least a local bottom forms on ETH this week.
ETH/BTC
Weekly:
Looking at ETH/BTC, we rejected the move back above 0.0365, which was not what bulls wanted to see, with price closing last week at 0.0345. We are now sat marginally above the weak higher-low we had formed but with the Q4 low at 0.0319 looking tempting. What ETH bulls want to see here is that flush on ETH/USD to also mark out a bottom in ETH/BTC, with a reclaim of 0.0365 on the weekly being the cleanest signal for this, confirming last week's rejection as a bear trap; if, instead, the Dollar pair gets the flush but ETH/BTC closes the week below 0.034, marking out the lowest weekly close of the cycle, that would be indicative of further weakness ahead in the pair, inevitably taking out 0.0319 into 0.03 before we get yet another attempt at the formation of a low.
Daily:
Turning to the daily, we can see that the move above 0.0365 was a fakeout, with the pair failing to hold that support and flipping it back into resistance before trading all the way back into 0.0347. From there, we are now breaking below support but trading right at trendline resistance turned support, so this is a little bit of a no man's land, where a wick below the trendline and then and strong reclaim of 0.0347 would look constructive short-term for another attempt at 0.0365; a close below this trendline, flipping 0.0347 as resistance intraweek would suggest we extend lower towards 0.0319. Nothing much to be gleaned from momentum here at present but we are approaching RSI levels that have marked out local bottoms since August.
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Gold:
Price: $2680
Weekly:
If we begin by looking at the weekly for Gold, we can see that price has had a couple of decent weeks in the face of the market-wide uncertainty since the New Year, with the pair pushing back into $2682 resistance and closing marginally back above trendline support last week. Momentum could be supportive of continuation higher here, but I'd want to see $2682 flipped as support this week to be more certain, in which case we likely take out $2727 next week and continue higher from there. If this move is a fakeout and we have more downside to come, we should see $2727 act as resistance and price close back below $2682 and trendline support, confirming the area as resistance and leading to another leg lower to retest $2535 at the very least.
Daily:
Looking at the daily, we have that second, less steep trendline breakdown from the June 2024 low that is currently being reclaimed, but this is right at the confluence of resistance - the $2682 level + trendline resistance from the all-time highs + the trendline mentioned from June 2024. If we wick above this cluster this week and then convincingly push back below it, that will look toppy to me, with $2590 as support beneath that, but $2535 the real magnet, aligning with a 200dMA retest over the coming weeks. Close this week above $2682 at flip that level as support and I do think the next leg higher begins from there. Key pivot here for Gold...
Copper:
Price:
Weekly:
Looking at the weekly for Copper, we have finally seen a show of strength off the levels outlined last month, with price pushing hard off the 200wMA last week to close at $4.30, with momentum also ticking higher. We are now right at reclaimed resistance around $4.32, which may cap the upside for a short while, particularly given its confluence with trendline resistance from the 2024 high; nonetheless, given the higher timeframe structure here, we should see a reclaim of $4.32 as support and trendline resistance turning support over the coming weeks, though some of this does hinge on whether we mark out a local top on Dollar strength. I would flip bearish here if we accept above the trendline and then close back below it.
Daily:
Looking at the daily, we can see there is confluence for resistance here with the200dMA, but momentum is strong, putting in a much higher-high. We should see a higher-low on Copper form above $4.21 over the next week or two, leading to a breakout above trendline resistance and a push towards major resistance around $4.60. Acceptance below $4.21 would be bearish here as we'd have two rejections off the 200dMA and then a loss of trendline support. This does look like it is playing out as anticipated for Q1 in the December Outlook so far, but we need DXY to take a breather to really put some tailwinds under this.
Dollar Index:
Price: 109.7
Weekly:
Looking at the weekly, we can see how price flipped the 2023 high as support last week and climbed higher, pushing towards the 110 handle, around which it is now sat. There is no momentum exhaustion as of yet on the weekly timeframe, but similarly we saw no exhaustion before the top in January 2017, so if that pattern of pre-Trump strength and post-Trump weakness is playing out again, we should look for a weekly close below this trendline support from the September lows as the beginning of that trend change. More convincing, however, would be a weekly close back below 107 for a much more sustained reversal. Until that comes, no doubt this just marches higher, supported by the trendline. What we do have this week is a confluence of event risk, with inflation numbers mid-week + Trump's inauguration next Monday, thus if the strength is indeed overextended here, we should see some sort of sell-the-news occur with DXY fading some of this strength into February.
Daily:
Turning to the daily, we can see that momentum is pushing up into that area of resistance from which local tops have formed since the September trend began, and we do have DXY marching higher without momentum following suit with a higher-high at present, similar to the November move above the 2023 highs. If we lock in bearish divergence here, that's an early signal for exhaustion of the trend at least short-term, where a retest of the yearly open becomes more probable subsequently down at 107.7. If, instead, we see RSI close above this 72-ish level that has been troubling for months as DXY continues to close at fresh highs, I think 112 is on the cards short-term.
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