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 41st 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, DXY and SPX.
Firstly, let's take a look at the calendar for the relatively light week ahead:
TUESDAY: RBA INTEREST RATE DECISION: (CONSENSUS 3.6% VS PREVIOUS 3.85%)
WEDNESDAY: RBNZ INTEREST RATE DECISION: (CONSENSUS 3.25% VS PREVIOUS 3.25%)
WEDNESDAY: FOMC MINUTES
THURSDAY: US INITIAL JOBLESS CLAIMS: (CONSENSUS 235K VS PREVIOUS 233K)
THURSDAY: VARIOUS FED SPEECHES
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $109,089
Weekly:
If we begin by looking at the weekly chart for BTC/USD, we can see that last week printed the all-time high weekly close at $109.2k, marginally albeit, but volume remains low and weekly momentum has not yet broken out. Nonetheless, price-action here is painting a picture of a July breakout, where any close this week above $112k would open up $124k as the next target, followed by $133k. Bulls now want to see this $109k area act as support this week, leading to that continuation into price discovery, where a wick through all-time highs followed by a rejection and a close back below the weekly open would look decidedly more bearish, more like a failed breakout from which we could see prolonged summer chop. As long as we remain above $99k, I think it is highly probable that the path ahead through summer is either up and to the right or sideways, as opposed to a much deeper correction; right now, I am expecting July to see price discovery towards that $133k level and we can assess how positioning, sentiment and price-action look when we get there.
Daily:
Turning to the daily, we can see that price is coiling right around local trendline resistance, with daily structure bullish and daily momentum looking to have bottomed out and turned higher. We are currently holding above the July open but I would not be surprised to see that $107k level retested before a real breakout and continuation higher. If we accept below the July open, then it's likely we take out last week's low into the June open around $104.5k, but if the July open holds this week as support I think we close the week strong and likely above that $112k all-time high, following which we push on towards the levels highlighted above. Nothing here is currently suggestive of major weakness at these highs, in my view.
Now, looking at potential setups for the week after last week played out near-perfectly, we would want to see these highs hold above the weekly open at $109.2k and price to push lower early this week, taking out the weekend lows into July open support around $107.2k. From there, we could look to play the reversal back towards weekly highs and above to take out last week's high at $110.6k into all-time highs:
On the short side, you kind of just want to see a Monday rip higher through these unswept highs without taking out the weekend lows and then fade that rally if we get some bearish divergence and a lower timeframe breakdown, looking for that to retrace back into the July open:
And here's a snapshot of positioning across Velo and CoinGlass:
And here's 3-month annualized basis:
And Bitcoin OI vs Altcoin OI:
And finally some of the expected 1-week and 1-month liquidation levels:
Ethereum:
Price: $2566
ETH/USD
Weekly:
Beginning with the weekly for ETH/USD, we can see that last week saw price bounce at the 200wMA and close marginally below the Q4 open - the level that continues to cap ETH. We have now fully retraced the June dump into reclaimed range support and I would expect to see this $2600 level now give way, where any weekly close above that level alongside a weekly momentum breakout signals further upside, where I no longer expect the $2850-$3050 range to provide much by way of resistance, instead leading to a 2025 open retest at $3330 rather swiftly. The bullish line in the sand remains that $2158 level, below which everything looks much worse for ETH.
Daily:
If we look now at the daily, we can see the bullish path is playing out freakishly tightly, and we have now flipped the 200dMA into support. Daily momentum is breaking out here and price needs to confirm this with continuation off these reclaimed support levels this week, where acceptance above the 360dMA would very much look like the next leg higher has begun, with $3330 as the major target. If we just look back at Q2 price-action, what we have is pretty clear: we rallied higher explosively off of support, then consolidated in a very tight range for weeks, before taking out the top of the range into $2850 and trapping breakout longs, then reversing and taking out the bottom of the range into $2158 and trapping breakdown shorts, before now returning back inside the range. Usually, when you take out both sides of a range the path ahead is continuation of the original move, which in this case would be higher. Early signs that this is not the case would now be losing $2400 as support.
ETH/BTC
Weekly:
Looking at the weekly for ETH/BTC, we can see that price managed to push back above support at 0.023 last week after what now looks like a fakeout below the level, much like the Dollar pair. Weekly momentum also looks set for a breakout higher, which would be a trend shift. If we see price break and close above the 0.0264 highs as weekly RSI breaks above 50, that would be very promising for ETH bulls, in my view. Any rejection here and close below last week's low would conversely confirm the bearish structure and precede that full retrace into support at 0.0185.
Daily:
Looking at the daily, we can see that right now both paths still look possible, but with the Dollar pair and with BTC looking how it does, I think the bullish path is more likely here for ETH, where a daily close above the 200dMA and 0.0264 highs would confirm this, likely leading to a multi-week rally towards that range between 0.0319 and 0.0365. For the bearish path to be validated, we need to reject here below the 200dMA and then break and close below 0.0215, after which I think touching grass on alts for the rest of summer looks like the more probable path.
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Gold:
Price: $3311
Weekly:
Beginning with the weekly for Gold, we can see that trend exhaustion continues to form as price is failing to break higher here, but we have to remember that this is all occurring within a multi-year uptrend, so these bearish divergences can (and often are) invalidated. Nonetheless, I continue to hold my short Gold leg of my long BTC / short Gold pair trade, with a view to closing that short leg if we accept above $3440 (the current highest weekly close) or we trade into $29xx. At present, this looks ready to roll over, but price has been chopping around the $3300 level for weeks now. If we see a close below last week's low, that likely confirms this rejection below $3300 and I would then expect $3130 to be retested, below which we have a fast track into the bottom of the channel and major resistance turned support. Above $3440 this divergence looks invalidated and we push higher towards $3700.
Daily:
Looking at the daily, we have turned trendline support from Dec 2024 into resistance on the most recent push lower and momentum has very much turned here, with daily structure once again bearish. A daily close below $3240 opens up that leg lower into $3130, but to be honest I think if $3240 gives way here we very quickly push lower towards that 200dMA and lower trendline, where I am wanting to cover the short leg of my pair trade. Not much else to add here beyond what I discussed on the weekly timeframe, to be honest. Still just awaiting a decisive move in either direction...
DXY:
Price: 96.74
Weekly:
Beginning with the weekly, the first thing I want to point out here given the extent of the move lower since January is just how cyclical this dollar weakness tends to be. Just look back at the previous two cycles lower in DXY, the first of which was Trump's first presidential term and the second of which was Covid: you scam rally higher, then you break back inside the range and then you dump for months, before bottoming out with bullish divergence and then beginning a sustained rally and continuation of the secular dollar bull trend. So far, nothing has changed - we scam rallied higher into January and then reversed the entire rally through the bottom of the multi-year range, where we are now sitting on a 12.7% drawdown from the Jan highs. In 2017, we saw a 15% devaluing of the Dollar into the lows and in 2020 we saw at 13.7% drawdown from that high. To me it seems pretty clear that we're still in this process of dollar devaluation within the longer-term secular bull trend, and this could lead to DXY pushing into 93 before year-end, which would be about a 15% drawdown from the Jan high. What we want to be looking out for are signs of exhaustion on the higher timeframes, which are not yet present unlike the prior two cycle lows. Looking now at current price-action, we could see some sort of bounce from here given all the short positioning in the Dollar, but given structure and momentum still look bearish I would expect that to be short-lived and price to push lower from there. If we see a rally into prior range support at ~99, I think that caps price and from there we make the final ascent lower, which in my view is likely to be closer to that 93-94 range but policy-dependent could be closer towards those two prior cycle lows around 90.
Daily:
Turning to the daily, one sign of a decent short-squeeze here would be reclaiming 97.5 as support as daily RSI breaks back above 50, which would lead me to expect the upper trendline to be retested into that historical range support some time in summer. Given that we have speed-run the entire drawdown this cycle so far, perhaps we don't see that sharper bounce but instead turn lower below 97.5, in which case I would be expecting 94.7 to trade in Q3 and for us to be getting close to the bottom of this dollar bear cycle going into Q4...
SPX:
Price: $6251
Weekly:
Last week saw SPX break fresh highs into $6290 after closing above the prior all-time highs the preceding week, with momentum now breaking higher and the v-reversal fully complete. There is nothing here on this timeframe that looks bearish - not momentum, not structure; nothing. If we get short-term dips, they are buying opportunities until we start to see trend exhaustion on the higher timeframes coincide with euphoric sentiment and positioning. From here, we should see continuation higher in July, but I am starting to finally see that sentiment and positioning are catching up - again, this is not bearish, but certainly makes it more probable that we get some sort of correction later this quarter...
Daily:
To get some more clarity, if we drop into the daily timeframe, we can see how momentum broke fresh higher here as we expanded into price discovery, with everything aligned for continuation higher. If we dip this week, I think that gets bought up and we continue to push higher into late July, where the 1.618 extension of the current trend would take us to 6464 - that would be just shy of 10% above the yearly open and where I would expect some profit-taking to begin taking place. If we do push that high that soon, I think August is red and we get the first major pull-back of this v-reversal, back towards that yearly open into September, from which we rally into year-end. How deep that correction is obviously depends on many factors, most of which would only be knowable as we form a top, but I could see $5900 being traded again in Q3 before continuation towards $6600 into Q4. On the shallower end, if positioning and sentiment do not go max euphoric or we don't push $6464 in July but rather put in a top in the $63xx region, then we could see $6037 retested as support in August and that area form a bottoming range.
I hope you've found some value in the read this week!
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