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 34th 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, SPX and altcoins via OTHERS.
Firstly, let's take a look at the calendar, with a lighter week ahead on the data front but two huge interest rate decisions:
MONDAY: US ISM SERVICES PMI (APR): (CONSENSUS 50.6 VS PREVIOUS 50.8)
MONDAY: US LOAN OFFICER SURVEY (Q1)
WEDNESDAY: FEDERAL RESERVE INTEREST RATE DECISION: (CONSENSUS 4.5% VS PREVIOUS 4.5%)
THURSDAY: BANK OF ENGLAND INTEREST RATE DECISION: (CONSENSUS 4.25% VS PREVIOUS 4.5%)
THURSDAY: US INITIAL JOBLESS CLAIMS: (CONSENSUS 235K VS PREVIOUS 241K)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $94,729
Monthly:
If we begin by looking at the monthly for BTC/USD, April closed out very strong indeed after a tumultuous start to the month post-Liberation Day, with price sweeping the Q1 lows into the March 2024 highs and finding support at $73.6k, bouncing all the way back inside the prior range above $89k to close at $94.2k. Volume, however, was lower than the prior two months, but somewhat resemblant of the bottoming candles in the prior two ranges from late 2023 and summer 2024. We should now expect to see $89k act as support in May, where any monthly close back below that level whilst remaining capped by $99k resistance would look bearish for June. If the level does hold as support in May and we see $99k give way, a monthly close above that level opens up continuation through to all-time highs and beyond, with major resistance likely up near $123k.
Weekly:
Turning to the weekly, we can see that last week saw a rejection off reclaimed resistance below $99k but price holding firm above $92k after closing above it the prior week. I would expect some sort of pull-back to follow this week into and below last week's low but for the $89k level to hold as support. If it doesn't, the deeper correction scenario I spoke about last week comes into play, where we could expect a higher-low to form anywhere above $82.5k (the Q2 open). All of this is to say that the trend is now pointing higher over the coming weeks and any weekly close above $99k will lead to acceleration into $109k, where we may find some resistance before price discovery. Ultimately, my current view is that BTC extends through those highs in June and trades into the $123k-$135k range by July.
Daily:
Dropping into the daily, we have a strong trend in momentum with bullish daily structure at present, which is good to see. We could see this daily structure turn bearish if we close below $92k, which would then open up that move lower into the $89k-90k range, where I expect more support to be found. As mentioned above, only closing below $89k would then make the deeper correction more probable - whilst that level is support, a shallower pullback is more likely from which we continue higher to retest $99k. If we take out the local lows into $90k this week and then bounce to close back above the yearly open, I think that's a pretty clear signal for that next leg higher. Not much else to add for now...
Looking at potential intraweek setups, on the long side you want to see price grind lower early this week into FOMC on Wednesday, taking out those recent lows as mentioned above. If we see some intraday trend exhaustion into that $90k area on Wednesday, you could look to enter half there with a view to add on the yearly open reclaim for continuation through the Friday high at $98k:
Conversely, a nice short setup would see price rally into Wednesday, taking out Friday's high whilst leaving the local lows unswept at $93k, with bearish divergences into $98k followed by a breakdown being the trigger for a fade of the move back into $92k:
And here's 3-month annualized basis, which is continuing to drop early in May, suggestive of disbelief in the rally:
As well as a snapshot of positioning on Velo and CoinGlass:
And finally here are the 1-month and 1-week anticipated liquidation levels:
Ethereum:
Price: $1821
ETH/USD
Monthly:
Beginning with the monthly for ETH/USD, we can see that April saw a retest of the 2018 high at $1420, where price found support and bounced to close marginally back above the March low and reclaimed support at $1747. Monthly structure is bearish here given the lower-high and subsequent lower-low but despite this the risk/reward is not favourable for further downside given the huge cluster of support below (and the general outlook for crypto over the next month or two). If $1747 can act as support here in May, we should see ETH/USD now retest the previous lows into the $2077 level at least, if not the more important cluster between $2158-$2281. Only if we can flip that cluster as support would this begin to look more promising for a sustainable reversal (where you could conceivably look for the top of the range to be retest at $4100). Close May below $1747 and we take out the $1420 lows.
Weekly:
Looking now at the weekly, we can see that for now the reclaimed support is holding but we need to now see expansion follow towards that $2077 retest and potential trendline breakout. If you are a brave soldier who took the long setup outlined last week, you'll be in the green, but any weekly close below last week's low should be your signal to cut fast. If we see a weekly close through trendline resistance, then we can expect a potential higher-low to form on any pull-back into $1747 later this month. Momentum does look to have bottomed out but I would not hold exposure if this does trade into $2077 given the bearish structure - just take the win if we trade that level and wait for another setup to form on a clean flip of the 2024 open.
Daily:
We can see the long setup here on the daily, and price should now flip last week's high as support as further confluence for the reversal. If we see $1870 wicked above and then price break lower and close below $1747, that is no bueno for longs and opens up a full retrace of the candle into $1535. If, however, $1870 does turn support, I would expect price to accelerate into $2077 over the next week or two before a possible pullback into a higher-low. In any case, $1747 is now your line in the sand for short-term bullishness.
ETH/BTC
Monthly:
If we begin with the monthly for ETH/BTC, we can see that April closed red, completing 5 consecutive red months for the pair and 10 out of the past 11. We remain in no man's land between the 2019 low and prior support turned resistance at 0.023, with momentum as low as it has ever been for ETH/BTC. This truly is make or break time - close May below the 2019 low at 0.016 and there is zero support all the way back into the December 2016 lows at 0.0074; conversely, close May above 0.023 and I think June sees continuation higher towards 0.029. Whilst we remain between those levels, there's not much to say for the higher timeframes...
Weekly:
Turning to the weekly, momentum remains in the gutter but price is marking out a swing-low above 0.0175 for now. We should now see 0.0187 act as support if this swing-low is legitimate, from which point we should expect a retest of 0.023 from below for another potential lower-high in this long-term downtrend. If by some miracle the pair closes the weekly above that level, that's an early sign for a shift in fortunes, in my opinion. Conversely, if we close the weekly below 0.0187 here, I think we take out 0.0175 into the 2019 lows, where you could look to blind bid given the significance of that level, but I'll be keeping capital allocated to more favourable opportunities until I see that regime shift in ETH...
Daily:
Looking at the daily, whilst we did get the momentum exhaustion and subsequent support reclaim, we have since just chopped around in a tight range above 0.0187 rather than found momentum to the upside to push into 0.0215. I do think it is likely to follow but this lack of momentum is not attractive from a capital allocation POV. If the pair can catch a bid here, you could look to add ETH exposure once 0.023 is flipped as support, as then it becomes much more probable that there's maybe 20%+ of further upside into the 200dMA.
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SPX:
Price: $5649
Monthly:
If we begin by looking at the monthly for SPX, we can see that April closed out much stronger than might have been expected post-Liberation Day with price testing $4800 and then bouncing to recoup the entire monthly drawdown and close out at $5600, back above long-term trendline support from the Covid lows. Momentum has now reset and looks supportive for further upside, fuelling the possibility of a v-reversal. I am not placing that as my base case, however, still preferring the likelihood of a w-shaped bottom. Nonetheless, this looks super bullish on the monthly timeframe and only a May close below the trendline would now look like a retest of the $4800 low is likely. If it can hold above that trendline in May, I think June sees the yearly open at $5900 tagged, where we then have the potential for a complacency shoulder or the full v-reversal into price discovery.
Weekly:
Turning to the weekly, can see that momentum looks more resemblant of Covid than 2022 at present, and last week saw price rally off $5500 to close firmly above trendline resistance from the all-time highs into $5680. We are now sat right below this cluster of significant resistance and we are likely to see late longs trapped here. If so, that's where the possibility of a w-shaped bottom comes in, where a multi-week pull-back into as low as $5280 before continuation higher is the base case. Looking ahead, closing the weekly below $5280 would be the signal for a deeper correction and possible retest of the lows.
Daily:
Now, looking at the daily, we can see the trajectory I marked out, but I am now much less convinced by the case for a deeper correction below $5097 in May. Instead, I expect price to be capped by the 200dMA at $5760 in early May and then pull-back into $5280 to fill in the gap before running higher in June through the 200dMA into the yearly open. This would be the w-shaped bottom scenario. If we are to get the v-reversal, we would see a much shallower pull-back here into $5500 to retest the 360dMA in early May before flipping the 200dMA as support - in that scenario we tag $5900 shortly thereafter, which is where the v-reversal could really accelerate if we flip that level, opening up price discovery in June/July. The reaction at that yearly open will be telling...
Others:
Price: $229.4bn
OTHERS/USD
Monthly:
Beginning with the monthly for OTHERS, we can see from this higher-timeframe view that the long-term trend is a picture perfect uptrend, with a series of higher-lows and higher-highs from the 2022 bottom and monthly structure remaining bullish. This trend remains intact after April tested $180bn as support and retraced the drawdown to close the monthly green at $234bn, back above trendline support. If May can now hold this confluence of support, we have a higher-low in this broader uptrend and June should see continuation into the yearly open at $335bn at the very least, with a retest of the highs beyond that into the all-time high at $490bn. This view only changes if May closes below the April open, where we would then expect the $180bn low to be taken out and price to retest the summer 2024 lows and potentially break monthly market structure.
Weekly:
Looking at the weekly for OTHERS, we can see that - much like summer 2024 - alts marked out a bottom around the 200wMA over the past couple of months, with price testing $180bn before bouncing to close firmly through trendline resistance from the all-time highs a couple of weeks ago. Momentum looks to have bottomed out and the volume profile is also looking resemblant of that 2024 run-up and correction. We should now see the March open at $242bn flipped as support, opening up a move into $280bn to retest that prior support as resistance before continuing higher to test the yearly open later in Q2. This bullish outlook is invalidated if we now close the weekly back below the 200wMA and support at $210bn, where we should then expect the $180bn support to be retested and OTHERS potentially move lower from there.
Daily:
Finally, dropping into the daily, we can see that my trajectory from April is playing out pretty much perfectly so far, with price now consolidating above reclaimed support at $218bn but below the March open. Momentum is now trending higher as daily structure has flipped bullish, so any pull-back here should be viewed as an opportunity to buy the dip. As mentioned above, we should see OTHERS break and close through $242bn soon, leading to that next leg higher into $280bn and beyond.
OTHERS/BTC
Monthly:
Looking firstly at the monthly for OTHERS/BTC, we can see that April closed red, marking five consecutive months of underperformance for alts vs BTC, but holding above that February low. If we zoom out, we can see that this cycle has been different to the previous two altcoin cycles, with the initial bottom from 2023 being lost in the 'valley of despair' and OTHERS/BTC now consolidating below it, whereas both previous cycles saw higher-lows. This is indicative of the lack of breadth we've seen in altcoin performance this cycle, where only select winners have been outperforming BTC, whereas the aggregate altcoin market has not and has been in a bear market since January 2022. Signs for the end of this altcoin breadth bear market would be a May close back above that 2023 bottom at ~3mn BTC, in which case we should expect continuation higher in June and potentially July, contrary to historical seasonality (though we all know seasonality has been largely useless this cycle). Further evidence of this bear market persisting for altcoin breadth would obviously be a close below 2.35mn BTC, in which case there is no support all the way back into 1.42mn BTC - the December 2020 lows. This would be suggestive of ever more narrow altcoin outperformance, with the majority continuing to underperform BTC even in a more positive environment for ALT/USD values.
Weekly:
If we look at the weekly, we can see that OTHERS/BTC continues to consolidate above the February lows, which is where I made a somewhat bold claim that the altcoin breadth bear market was likely to end. Obviously, if we flip that Feb low at 2.35mn BTC as resistance in May, I am wrong on this view and narrow outperformance will continue to be the environment we are in. If this support holds, however, and we see the market move higher and reclaim 3mn BTC, then we have the makings of a sharp, swift 'alt-season' of a more classic kind, where not only do we see altcoins outperform BTC but a broader proportion of them do so than has been the case all cycle. Let's see how the next few weeks shape up...
Daily:
Finally, looking at the daily, we can see that daily structure remains bearish but momentum is starting to show some signs of life here. I would like to see this validated by OTHERS/BTC reclaiming recent support turned resistance at 2.64mn BTC as momentum makes a higher-high, with daily RSI firmly back above 50. This, in turn, would open up continuation for the retest of that major resistance cluster around ~3mn BTC, where the 200dMA is now also sat. Only above that cluster would things become more promising for alts more broadly - and if we fail here and flip 2.35mn BTC as resistance, the downtrend persists and even with a potentially strong May and June for crypto you would have to be very selective with your alt picks.
I hope you've found some value in the read this week!
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