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 45th 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, DXY and SPX.
Firstly, let's take a look at the relatively busy calendar for the week ahead:
MONDAY: US FACTORY ORDERS (JUN): (CONSENSUS -5.2% VS PREVIOUS 8.2%)
TUESDAY: US S&P GLOBAL COMPOSITE PMI (JUL): (CONSENSUS 54.6 VS PREVIOUS 54.6)
TUESDAY: US ISM SERVICES PMI (JUL): (CONSENSUS 51.5 VS PREVIOUS 50.8)
WEDNESDAY: VARIOUS FED SPEECHES
THURSDAY: BANK OF ENGLAND INTEREST RATE DECISION: (CONSENSUS 4% VS PREVIOUS 4.25%)
THURSDAY: US INITIAL JOBLESS CLAIMS: (CONSENSUS 220K VS PREVIOUS 218K)
FRIDAY/SATURDAY: VARIOUS FED SPEECHES
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $114,464
Monthly:
If we begin by looking at the monthly for BTC/USD, we can see that July closed at fresh all-time highs, firmly through multi-month resistance around $110k, on higher volume than June with a tick higher in momentum. Price pushed as high as $123k, where it found resistance at the 200% extension of the previous bear cycle, ultimately closing out July at $115.7k. There is absolutely nothing bearish about price-action, structure or momentum on this higher timeframe. For those looking for reasons to be bearish on a mid-term timeframe, you want to see August now close back below the July lows and firmly back inside that $110k multi-month resistance; in that scenario, we have a failed breakout and likely clear out the June lows in September below $102k. Until then, this is bullish on this timeframe and we should anticipate $110k to hold into September and price to then push through $123k towards the next major resistance, which on the monthly timeframe would be around $155k.
Weekly:
Looking now at the weekly, we can see that price rejected below $121k resistance last week, selling off from the weekly open near $119k all the way into the weekly close at $114.2k, having pushed marginally lower over the week back towards those prior all-time highs at $112k. As mentioned last week, unlike many I do not see any issues with a rounded retest of a multi-month breakout when we have had plenty of time in between, which we have, and I mentioned that we could actually squeeze as low as that July open to really bait shorts into support before bottoming out and reversing. It remains to be seen whether that plays out but if we lose last week's low this week and don't immediately bounce, that's the scenario I am anticipating. If we do hold above $112k this week, I think we're putting in our swing-lows and our August lows here and we continue to retest $123k by end-of-month. Weekly momentum remains bullish.
Daily:
Turning now to the daily, we can see that daily structure broke down after the multi-week range formation between $116k support and $121k resistance, with price closing below that range and pushing into $112k on the weekend, where we caught a bid and bounced higher, sat now in no man's land between those prior all-time highs as support and prior range support as resistance at $116k. This is also where the August open sits, so this is a key level. Daily momentum has completely reset here and we would expect to see either some bearish divergence into the next push lower (if it comes) or a reclaim of the August open as support for signs of bullish continuation. If we close back inside $112k on the daily, I think we squeeze as low as that July open, and we see a lot of shorts open into that support in anticipation of a much deeper correction and that fuels a v-shaped reversal off of $107k back towards the highs going into September. This view is invalidated if $107k turns resistance, in which case we likely revisit the $100k level.
Now, looking at potential setups for the week, longs would be favourable at or around the weekend lows, assuming we hold below the August open early this week, where layering bids around $112k and then adding on a weekly open reclaim with a view to clearing out those unswept $119k highs makes sense:
There is also the potential for a really nice short setup early this week but it would make me a tad less confident on the immediate long at weekend lows, because I would want to see the August open deviated above with trend exhaustion into the highs, then a breakdown back below August open as resistance, where you enter shorts and expect a full retrace of the weekend pump back into $112k:
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: $3541
ETH/USD
Monthly:
Beginning with the monthly for ETH/USD, we can see that price had an incredible July, bouncing off support above the 2024 open through multiple levels of resistance and firmly back above multi-year trendline support, pushing marginally below 2024 highs at $4093 and closing out the month at $3697. You don't need me to tell you that there is nothing structurally bearish about the July price-action, but BTC-dependent we may get a little more downside here to retest that reclaimed support below into $3052, although I think that level will be front-run to be honest. Unless we close back below $2850 though, I don't think you should be look to sell rips but rather buy dips on ETH.
Weekly:
Looking at the weekly, we know momentum is building as has broken out on the recent rally, and price out in a swing-high above resistance at $3770 but below the multi-year resistance in that $4090 area. We have since come lower to retest the 2025 open at $3330, which for now is holding as support, as well as above that trendline. It would not surprise me to see last week's low swept and price to then form a swing-low into mid-August above $3050, from which it pushes higher to retest $4xxx, where I do expect the next test to be successful and give ETH its first breakout above that area since 2021.
Daily:
On the daily, I have marked out the sort of trajectory we might see here, with the August open at $3700 acting as resistance this week and leading to a flush of the 2025 open, below which I do expect there to be significant demand. From there, any acceptance back above $3700 is the signal for the attempt on 2024 highs at $4093. Daily momentum has reset to the 50 area on RSI and if we don't get that sweep of the lows we should look for resistance at $3770 turning support into next week for a sign that anyone waiting for much lower prices is about to be disappointed. Daily structure is bearish here, hence the view that reclaiming $3770 is the clearest signal should we not go the long way around and consolidate a little more into later this month.
ETH/BTC
Monthly:
Looking at the monthly timeframe for ETH/BTC, we have a definitive swing-low on this timeframe, with momentum rebounding and price reclaiming multiple levels of support. We haven't really seen this sort of price-action on ETH/BTC since 2020. July rallied off the monthly open all the way into the close at 0.032, and I would now expect to see that 0.0265 area to hold firm below as resistance turned support, should 0.0294 give way short-term. Ultimately, this looks like it wants continuation higher at least into 0.036 before any major resistance, but likely 0.0417 as has been marked out since the lows. I just don't think you can be bearish ETH into year-end with ETH/BTC looking like this. If August retraces the July rally back below 0.0265 into September, then we can re-assess.
Weekly:
Turning to the weekly, we have bullish weekly structure and firmly bullish momentum after the past couple of weeks, with weekly RSI at its highest level since mid-2022. Support is acting as resistance at 0.032, which was expected, but price could here retrace as low as 0.0265 to retest the breakout level and form a higher-low before it even remotely looks bearish on this timeframe. If 0.0294 continues to act as support, however, it is likely the next push through 0.032 leads to expansion towards 0.036, which will give us that faster extension on the Dollar pair off the lows and towards that $4090 level. As I have been discussing since May, my expectations for this rally are continuation into multi-year trendline resistance at 0.0417 - what happens beyond that we will have to assess as price moves closer to that level.
Daily:
Finally, dropping into the daily, we can see that price is forming a range right around the 360dMA, where a daily close below support at 0.0294 invalidates this as a re-accumulation range and leads to that deeper pullback into 0.0265, above the 200dMA, where I do expect us to find significant support. If this range continues to hold, momentum will continue to reset and then we likely push higher going into mid-August, where reclaiming 0.032 and the 360dMA as support = next leg higher. Keep it simple.
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DXY:
Price: 98.5
Monthly:
Beginning with the monthly for the Dollar Index, we can see that July closed as a bullish engulfing candle of the June range, having wicked below the June low and found demand into the July close at 99.6, closing back above the 2023 lows. This was somewhat expected given the historic short dollar positioning into the range lows, but despite this strength I do not expect this to now be the beginning of a material trend shift in DXY; rather, I think it is likely we see August form a high from which the Dollar continues to weaken for one more leg lower, into that 93.1-94.7 range before marking out a cyclical bottom. Invalidation of this view would be August closing back above 101, reclaiming multi-year range support.
Weekly:
Looking at the weekly, we can see that price wicked as high as the 360wMA at 99.5 last week, finding resistance marginally above that level but below reclaimed resistance at 100.2, with weekly structure still firmly bearish. If the mid-term path is to remain bearish, we should see 101 act as resistance in August, where we could see a wick above last week's high before rejection and continuation lower, or price to already have formed that lower-high from which it moves down, where a weekly close back below the July open would begin the descent to 94.7. We can see in the prior two Dollar bear cycles within this secular bull trend that we got a multi-week rally off the lows to reset momentum before continuing lower and ultimately marking out higher timeframe trend exhaustion, and I think there's a good chance we see something similar here into Q4. As mentioned above, flipping 101 as support = invalidation of this view and likely the beginning of a material trend shift.
Daily:
Turning now to the daily, we can see that price pushed into yearly trendline resistance, above which it rejected hard on last week's jobs report, now sat right around reclaimed support 98.3. If we find a bid here this week, continuing on from last week's risk-off sentiment, we should see price making a marginal higher-high above last week's high into 100.4 and then reject and move lower; alternatively, if the high is already in, we should find resistance at that 2023 low around 99, marking out a lower swing-high from which price then closes back below 96.8, turning daily structure bearish once again and beginning the next leg lower...
SPX:
Price: 6271.8
Monthly:
Beginning with the monthly for SPX, we can see that July saw price close firmly above prior all-time highs, having closed marginally above in June, with equities rallying off the July open into $6442, where price rejected and closed out the month at $6341. Given the extent of the rally and the fact that we did end up pushing towards the levels marked out earlier this month, I did buy downside protection and am expecting some moderate weakness in August going into September for SPX, but given the continued disbelief in positioning and sentiment I do not expect a deep correction. As long as August does not close back below the 2025 open at $5906, I see no reason to be bearish on the higher timeframe for equities, with a view to continuation higher into year-end.
Weekly:
Turning to the weekly, we can see that last week saw a rejection off those all-time highs, with price selling off into the close at $6240, erasing the prior three weeks of grinding higher and very likely putting in that local top, at least for most of August in my opinion. We should see continuation lower here towards prior all-time highs at $6150, but I expect we push a little lower than that to get some more positioning to puke, but ultimately I do not expect us to go any lower than that 2025 open at $5906 and, in fact, I am expecting that area to be heavily front-run for the higher-low, with $7000 as the next major resistance above as the 1.618 extension of the Tariff crash. Buy August weakness greedily.
Daily:
Looking finally at the daily, we can see that my squiggle from the beginning of July basically played out, though we capped out a few points shy of my $6464 target, rejecting at $6442 and now pushing lower as anticipated. I think if you're sidelined or if you bought downside protection you look to monetise that as we approach the $6090 area, laddering bids below that into $5906 if we are so lucky. Not much else to add here - I think by October we are trading above $6500 and by January we are pushing up towards $7000.
I hope you've found some value in the read this week!
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