01 October 2019

Technical Analysis Tuesday: Market outlook & Q3 recap

Patrick Heusser

Patrick Heusser

Senior Trader at Crypto Broker AG

About the author

Before we look at the charts, let’s do a Q3 recap.

Looking back over the past five years for bitcoin, we see that the third quarter was mainly negative: it went down four times and up twice. Taken all together the Q3 figures add up to a performance of -6.8%.

Comparing bitcoin performance with the top 20 coins, only Tezos is an outperformer.

But all of those coins show a negative performance quarter-to-date.

Checking the numbers on the month-to-date basis, we see a few single coins trying to turn bullish. We have Ethereum, Ripple, IOTA, and Cosmos (ATOM) in the green.

On the technical chart analysis, we see the following:

BTC$ (daily)
The market experienced a healthy partial shake out of the leveraged long positions out there. We see this on the BTC$ future basis on the various derivative exchanges (BitMEX, FTX, Deribit, etc.). The basis tightened substantially and has not widened out with this current turnaround. Additionally, the option market saw the skew coming back sharply as well. That expresses a similar sentiment change, meaning that the market lost its bullishness.

The down move took a first pause around the expected 8k barrier (red dashed line). My feeling is that we have not seen the “real” capitulation yet. The future basis has more room and so does the skew in the option market.

This last leg would ideally take us down to the 6.5k, where I expect to see good buying interest come in. In combination with a completely deleveraged market, we have a very good set-up for the next bullish leg up to attack the 20k level.

In case we do not go down there, I need to see a daily closing above the 9.1k level. This would bring us back into the 9.1 – 10.3k range.

ETH$ (daily)
We hit my target pretty quickly and only printed wicks below the $165 level. It seems to be a tough support to break.

In my opinion, I currently see no good risk/reward set-up. The only trade on my radar is to stop into some short ETH$ positions when we break through $160-165.

Gold (weekly)
The five-wave sequence broke. A fairly famous technical analyst, Peter Brandt, was looking towards a shoulder-head-shoulder formation, which was confirmed yesterday.

The potential target would push gold towards $1,415, which is basically the next liquidity pool after the $1,500 level (see the volume bars on the right hand side).

CNH$ (daily)
My doubts were unjustified. The market is pushing further and we are close to the recent high of $7.20.

It is quite interesting to see how the short-term correlation broke down between gold, bitcoin, and the offshore-China currency.

All eyes were on it during the heights of the Hongkong protests.

LTC$ (daily)
My call to open shorts after we break $60 to the downside has worked so far.

However, it is a bit unfortunate that the only wick down into the support zone got pushed back up very quickly.

It makes sense to take some money off the table and close the short position. I would open another short higher up with a stop just above $64 with a target deep into the support zone at around $50.

BCH$ (daily)
Another unjustified gut feeling of mine. The shoulder-head-shoulder finally materialised and had some real power after breaking the neck line.

The recent low was just below $200. I think that proper risk management behaviour is to close 2/3 of the shorts and let the remaining leg open with the stop at entry.

Altcoin$ (4h)
After a steep sell-off and some consolidation at around the $500 level, we are seeing continuous buying pressure.

We are approaching a tough resistance level at around $555. We also have the Ichimoku cloud converging with that level.

I would play this similar to the BCH$ trade. Close 2/3 of the short positions and let the remaining leg run with a stop at entry.

Read more