In this seventh 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 the altcoin market, via OTHERS.
Firstly, let's take a look at the calendar:
After last week's quieter data schedule, we return to regularly scheduled programming this week, with a variety of growth and labour market-related data, as well as a monetary policy decision and many speeches. As an aside, given recent weather-related turmoil in the US, it is likely we see some noise for several weeks regarding labour market data releases, so perhaps these will be less telling as headline figures and will require more inspection under the hood:
TUESDAY: NY EMPIRE STATE MANUFACTURING INDEX (CONSENSUS: 2.3 VS PREVIOUS 11.5)
WEDNESDAY: ECB PRESIDENT LAGARDE SPEECH
THURSDAY: ECB MONETARY POLICY DECISION (CONSENSUS 3.25% VS PREVIOUS 3.5%)
THURSDAY: INITIAL JOBLESS CLAIMS (CONSENSUS: 241K VS PREVIOUS 258K)
THURSDAY: RETAIL SALES (MOM) (CONSENSUS 0.3% VS PREVIOUS 0.1%)
FRIDAY: CHINA GDP (QOQ) (CONSENSUS N/A VS PREVIOUS 0.7%)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $64,330
Thoughts: Firstly, let's take a look at these two higher timeframe charts published below, highlighting the weekly and daily view for BTC, before looking at a few hourly charts with potential setups, plus an overview of market positioning.
Weekly:
If we begin by looking at BTC/USD on the weekly timeframe, we can see that last week saw price sell off the weekly open lower through the prior weekly low, finding support above the critical $59k area and bouncing back above that prior weekly low to close the week marginally green. From a purely price-action perspective, this is quite clearly a bullish move: we took out early longs from the previous week into a higher timeframe demand zone, formed a higher-low above that zone and then closed the week back above the open. We are, however, now pressing right up against major resistance, with both $65.5k continuing to cap price, alongside trendline resistance that has now held for 217 days. Given this setup, however, I think we are now entering the period during which it is likely this trendline gives way.
Bulls want to see momentum from last week continue and lead price through this resistance cluster, where any weekly close above $65.5k would be as clear a signal as it gets for an all-time high retest. If we do accept above $65.5k this week, it is likely we retest $69k going into month-end. If, however, we deviate above this resistance cluster and close the week back below $65.5k and the trendline, we should look for a deeper retracement and retest of $59k as demand. Momentum indicators are supportive here of a turn higher.
Daily:
Looking now at the daily, we can see that the 200dMA has also been capping price right at the quarterly open for this past couple of weeks, but last week saw price sweep $59.7k into the September open, find support and reverse sharply back through the $59.7k low and into that 200dMA at $63.3k, below which it consolidated over the weekend. Early price-action this week has seen that consolidation turn into expansion beyond both the Q4 open and 200dMA, and whilst this is promising we must await confirmation of this structural shift with a daily close above $63.4k. If we get that - and this move is valid - we should not then accept back below that cluster of resistance turned support and should continue higher into $65.6k for a retest of resistance. Again, momentum indicators are looking up from here, with no signs of exhaustion.
Now, for potential setups for the week, the strongest long setup one could take here would be as marked out below, assuming we do not just continue ripping through the week:
In the above chart, we can see that price accepts above $63.3k early this week and then retraces back into the zone between the weekly open at $62.8k and quarterly open at $63.3k later this week, perhaps deviating below the weekly open and then reclaiming the Q4 open as support. We could look to play that reclaim higher into the untapped highs from a couple of weeks ago into $66k.
A second, messier but also possible setup would be a bear trap scenario, whereby we accept up here but then retrace the entire pump through into weekend lows, liquidating all the early longs this week and then reversing off $61.6k back through the weekly open, again riding that reclaim up into $66k:
If you want to play the short side, though I personally don't find it favourable here given the R/R, you could await a move back below the quarterly open for that flush of weekend lows, but you risk the weekly open just below that acting as support:
Now, here's an overview of general positioning across Velo and CoinGlass:
In the below chart from CoinGlass, we can see that build-up of longs from as deep as $60.5k This is something to keep in mind if we do start to see a flush below weekend lows to see how many of these are puking:
And finally here are anticipated weekly and monthly liquidation levels:
Ethereum:
Price: $2523
Thoughts: Let's begin by looking at the weekly and daily timeframes for the Dollar pair before moving onto ETH/BTC.
ETH/USD
Weekly:
Beginning with the weekly view for ETH/USD, we can see that price bounced off the 200wMA last week and held firm above that trendline as anticipated, pushing up off that area to close the week marginally green. We are now sat right around that September open and still below the Q4 open at $2600, so for this structure as a higher-low to be validated we should see continuation through both those levels, where a weekly close above the Q4 open would be indicative of continuation higher into October end, likely retesting $2850. Momentum indicators, much like for Bitcoin, are supportive of a reversal here - and whilst we hold above the yearly open and trendline support it makes sense to lean towards that $2850 retest sooner rather than later.
Daily:
Turning now to the daily, we can see how that higher-low formed last week, also marking out a higher-low on RSI and turning higher, with daily structure still bullish here. Close the daily above the September open at $2512 and it is likely we keep pushing early this week into the $2600 level, which should not act as resistance if we are to see continuation into the September highs at $2707. If we can close the daily above the Q4 open, it becomes highly probable that ETH continues into the cluster of resistance now sat at $2850, where we have prior support and the 360-day moving average. Only once we accept back above that level can we start thinking about the move to fresh yearly highs...
ETH/BTC
Weekly:
Looking at the weekly for ETH/BTC, there continues to be very little to discuss for the time being, given that price remains trapped between local support at 0.0383 and reclaimed resistance at 0.0403, with weekly structure still bearish but momentum beginning to bottom out. The view here remains straightforward: any weekly close below 0.0383 leads to a likely final leg lower into 0.0365, where we should expect demand to step in as it is the last major level of support before 0.03; alternatively, any weekly close back above 0.0417 would be confirmation of a bottom, from which we could anticipate a reversal towards the 2022 lows and trendline resistance.
Daily:
Looking at the daily, we can see that there is some degree of diminishing momentum on this most recent push lower but no real divergence yet as we did not break the lows. We have been tightly wound between 0.0383 and 0.0403 for a week now, so it is really just a waiting game to see which side of the range gives way; accept above 0.0403 and we might well be forming that longer-term bottom, where we would need a higher timeframe close above 0.0417 to confirm, but close below 0.0383 and down we go towards 0.0365. If BTC marches towards all-time highs into October end, it is likely the latter scenario plays out, with ETH/BTC bottoming after BTC/USD makes a fresh all-time high later this year.
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Gold:
Price: $2660
Thoughts:
Weekly:
Beginning with the weekly view for Gold, we can see that despite a minor correction last week, with price selling off post-weekly open, we found demand to close the weekly green, with momentum indicators still not showing signs of exhaustion just yet. Given the strength of the weekly close, if there is momentum this week, we should see the all-time high at $2687 taken out, where the reaction will be telling for the short-term trajectory of Gold: close the weekly firmly through $2687 and it becomes likely we see another leg higher, with only $3000 as the higher timeframe level to be looking at; but deviate above $2687 ad close back below it and I think it is likely Gold takes a little bit of a longer breathe and perhaps moves towards trendline support over the coming weeks.
Daily:
However, turning to the daily, we can see that the most recent trendline support - and thus the steepest part of the rally - acted as support last week, with price bouncing sharply off it and pushing back towards the highs. Given the parabola, if we are to get another leg higher, this trendline should continue to act as support this week. If we deviate the highs and then break the trendline, Gold bears might be able to get a cheeky short in back towards $2535 over the next few weeks; if, instead, we close above $2687, any dip back into the trendline would be a long opportunity with the tightest of invalidations (a close below the trendline), with a target of the 1.618 extension at $2750.
Dollar Index:
Price: 102.65
Thoughts:
Weekly:
Beginning with the Dollar Index on the weekly view, as anticipated several weeks ago, we go the short squeeze through local trendline resistance and range resistance at 101.9 and have been consolidating above that area and below major resistance at 103.7, which we continue to expect will cap the upside here. Whilst that level remains unbroken, we should expect to see DXY begin to form a lower-high here and then break back below 101.9, where any weekly close below that level would lead to a retest of range lows into the 100 handle. Close the weekly above 103.7 and we have some concern for risk assets given the significance of this level historically in capping major rallies before major downtrends.
Daily:
Looking at the daily, we can see how price found some support at 101.9 and pushed higher towards 103, around which it is now consolidating. There is no trend exhaustion just yet, but this is something we should be looking for over the coming weeks. If we see a push higher towards 103.3 with momentum divergence forming, that's our signal for a local top, as marked out in the chart above. Not much else to add here for now whilst 103.7 is capping the upside but it remains in consolidation above 101.9...
Others:
Price: $224.1bn (3.49mn BTC)
Thoughts:
OTHERS/USD
Weekly:
Beginning with the weekly view for OTHERS, we can see that the altcoin market broke and closed beyond trendline resistance from the yearly highs a few weeks ago, pushing into $237bn resistance and then pulling back. The market retraced below the trendline, found support at the 200wMA and last week closed back above the trendline, forming a higher-low. This is precisely what bulls want to see, particularly with momentum looking poised for a turn higher. We should now see continuation through $237bn over the next couple of weeks, where a weekly close above that level should give the all-clear for a sustained reversal into year-end targeting the 2024 highs. If this structure is to remain intact - and the parabola is to be validated - we should not now close the weekly below the 200wMA at $197bn. Above $237bn, we have another 25-30% move to fill the gap into $300bn as the next major resistance.
Daily:
Turning to the daily, we can see how daily structure is promising for bulls, with a higher-low at reclaimed support around $200bn followed by another higher-low a week later above that leading to this push into the 360-day moving average at $227bn. We are now sat right at the most pivotal cluster of resistance, with prior horizontal resistance, the 360DMA and 200dMA all overhead. Clear this cluster and close the daily above $237bn and it very much appears to be a new leg higher beginning, with the 100% extension of the current trend off the $168bn low at $274bn. Again, even if we reject around here early this week, the main concern is to protect $196-200bn as a higher-low.
OTHERS/BTC
Weekly:
Looking firstly at the weekly view for OTHERS/BTC, we can see that altcoins continue to consolidate against BTC below this support turned resistance level at 3.6mn BTC, but remain above reclaimed support at 3.28mn BTC. Emergence from this range through that support turned resistance will be the signal for a more sustained reversal, where any weekly close above 3.6mn is likely to lead to another 20% of upside before any further resistance. Momentum is in favour of the bulls here also. No need to get bearish alts vs BTC unless we close the weekly back below 3.28mn, where a retest of 3mn as cycle lows becomes more probable. Looking ahead, if 3.6mn is reclaimed as support, given the seasonal period ahead and momentum factors, it is likely we continue towards that 200wMA and 2024 highs up near ~5mn BTC.
Daily:
Finally, looking at the daily, there is not a huge amount to add here except that momentum has been putting in higher-lows and higher-highs and if we can push through 3.6mn this week it is likely we get a more violent leg higher given the amount of consolidation we have seen since June around these levels. When BTC closed the weekly at a fresh all-time high in February 2017, that marked the bottom for ALT/BTC pairs at they continued higher from there; when the same happened in November 2020, we got a flush lower into mid-December for ALT/BTC prices before a very sharp reversal. Given the structure and setup here (including having trended down since March), I am leaning more towards a weekly close above $74k for BTC/USD leading to a near-immediate push higher for OTHERS/BTCUSD. Let us see what the next 2-3 weeks brings...
We hope we've provided some value here – good luck with the trading week ahead!
