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 51st 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, SPX and altcoins via OTHERS.
Firstly, let's take a look at the calendar for the extremely busy week ahead:
MONDAY: US NY EMPIRE STATE MANUFACTURING INDEX (SEP): (CONSENSUS 3 VS PREVIOUS 11.9)
MONDAY: ECB PRESIDENT LAGARDE SPEECH
TUESDAY: US RETAIL SALES (MOM) (AUG): (CONSENSUS 0.3% VS PREVIOUS 0.5%)
TUESDAY: US INDUSTRIAL PRODUCTION (MOM) (AUG): (CONSENSUS 0% VS PREVIOUS -0.1%)
WEDNESDAY: BANK OF CANADA INTEREST RATE DECISION: (CONSENSUS 2.5% VS PREVIOUS 2.75%)
WEDNESDAY: FED INTEREST RATE DECISION: (CONSENSUS 4.25% VS PREVIOUS 4.5%)
THURSDAY: BOE MINUTES
THURSDAY: US INITIAL JOBLESS CLAIMS: (CONSENSUS 240K VS PREVIOUS 263K)
FRIDAY: BANK OF JAPAN INTEREST RATE DECISION: (CONSENSUS N/A VS PREVIOUS 0.5%)
Now, let's dig into asset-specific price-action for the week ahead, looking firstly at Bitcoin:
Bitcoin:
Price: $116,171
Weekly:
If we begin by looking at BTC/USD on the weekly, we can see that last week closed strong as we rallied off the weekly open into the August open at $115.3k, closing firmly back above $112k as reclaimed support. Obviously, this is now the line in the sand for short-term bullishness, as closing immediately back below $112k would open up downside through the July open and local lows at $107k towards the $99k swing-low. Overhead, $117.5k is the next resistance before a push towards all-time highs is on the cards. Rejection this week between $117.5k-$120k would be bearish going into a potential window of weakness between next week and early October, where we could then be set up for another leg lower towards trendline support before marking out a major low; conversely, acceptance above $120k going into quarterly close would offer very little relative downside during that window in my view, where it becomes much more probable we put in a higher-low above $107k rather than take out that low. Whilst I have had a pretty good read on week-to-week price-action of late, this next couple of weeks is a lot more unclear for me with many variables - I do think the picture will look clearer by next Monday as to whether we get a more brutal bear trap below $107k into early October or a more textbook higher-low formation. In either scenario, my view currently remains that the second half of Q4 will be very strong.
Daily:
Dropping into the daily, we can see that daily structure is now bullish following the reclaim of $112k as support, and price is now consolidating right around the August open and below the mid-range at $117.5k. Acceptance above both of these levels early this week likely leads to a pop higher towards all-time highs, where $123k is obviously major resistance on this timeframe. If we wick above $117.5k into $119k but reject and break lower again, that provides some confluence for my higher timeframe view of a lower-high formation here below all-time highs before a bear trap into early October. That is thinking a couple of weeks ahead, however, and for now it is key to remember that despite the market calendar this week we have bullish structure and momentum here, so if $112k can act as support we should expect price to keep pushing higher. Only when we see that rejection and subsequent breakdown from either higher up or back below $112k should we think more assuredly about further downside to come. As mentioned above, if we keep pushing higher through FOMC into a weekly close above $119k, next week likely sees all-time highs retested where acceptance above into the Q3 close greatly diminishes the probability of $107k being taken out on any early October weakness.
Now, looking at potential setups for the week, on the long side you want to see a sharp flush lower early this week taking out the $114.6k lows into $113.5k, where you could layer bids with invalidation on a daily close below $112k. looking for $117.5k as TP1 and $119k as TP2 going into FOMC:
On the short side, I would really love to see $114.6k hold early this week and price just grind higher all through Monday and Tuesday, beginning to short above $119k pre-FOMC but adding more aggressively on acceptance back below $117.5k post-FOMC, with $112k as the major target on that move, though likely a short you could trail even lower given how daily structure and momentum might look going into the last week of Q3:
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: $4639
ETH/USD
Weekly:
Beginning with the weekly timeframe for ETH/USD, we can see that price rallied off the open last week back above $4400 but remained capped by $4900 prior highs, closing the week at $4605. Whilst this was a decent weekly close, we can't read too much into this yet as we remain range-bound between resistance turned support at $4400 and all-time highs at $4950. Acceptance above all-time highs is obviously what we want to see for the next leg higher to be validated, where $5750 is the first target. If we fail to flip that resistance into support and break lower from here back below $4400, it begins to look like a lower-high, where a weekly close below $4090 would then confirm a multi-week top and another leg lower into at least $3730. Again, my read here on the next couple of weeks for ETH is not particularly clear and I would like to see how this week shapes up before being more confident in specific levels to be traded going into October. Higher timeframe, however, this is still a very bullish chart and I fully expect some period of price discovery beyond $5000 in Q4.
Daily:
Looking at the daily, we have some sort of ascending triangle forming here into the highs, which with the stacked calendar ahead, plus quarterly end and monthly open all to come, it would not in the least bit surprise me to see a fakeout above $5000, a fakeout below $4090 and then a real breakout higher to play out over the coming weeks. If we close the daily above $4950 and see longs start piling in for the breakout trade, that would open up that bull trap scenario into the quarterly close, where you would then want to bid the subsequent liquidation event, particularly aggressively if late shorts then pile in at the lows. For now, we are just chopping around between two very important levels, digesting a massive move higher. What would be particularly bullish and invalidate to some degree my major bear trap scenario into early October would be acceptance above $5000 with derivatives fading the move rather than playing the breakout. Lots to pay attention to over the next week or so...
ETH/BTC
Weekly:
Looking now at the weekly for ETH/BTC, we can see that price continues to consolidate below multi-year trendline resistance but marked out a local low last week at 0.0379 before retesting reclaimed resistance at 0.0417, where it rejected again. As has been the case since we tagged the trendline, the short-term base case is consolidation below with the formation of a higher-low somewhere between 0.032 and 0.036 before a breakout and next leg higher, but if we are marking out a swing-low here and can close the weekly through 0.0417, the breakout is on and I would expect 0.046 to be tagged swiftly, with 0.049 and 0.055 as targets above that. Zero reason to be higher timeframe bearish this pair though, as momentum and structure remain firmly bullish.
Daily:
On the daily, we can see how those two scenarios might play out, with acceptance above the trendline this week leading to another leg higher into the quarterly close, whereas rejection here (which is my base case) would lead to a deeper retracement, likely through the 2025 open to mark out a low above the 360dMA. Nothing else to add here for now, to be honest. Pretty straightforward setup on ETH/BTC.
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DXY:
Price: $97.14
Weekly:
Beginning with the weekly for the Dollar Index, we can see that price continues to chop around range lows but momentum is turning over here and my view into year-end remains that we see another leg down through 96. Given that we do have FOMC this week, there is some probability that we got a post-FOMC Dollar bid if Powell is less dovish than consensus (which I think is likely given how dovishly the curve is now priced). In that scenario, we could get another squeeze higher towards the 99 area into early October before that next leg lower begins; and if we squeeze higher but then accept back above 100 as reclaimed support, I think the probability of another leg lower is nullified.
Daily:
Looking at the daily, we can see these two possible paths, where rejection this week and a breakdown below 96.8 opens up that immediate downside to fresh yearly lows and towards 94.5; conversely, acceptance above 97.5 post-FOMC, flipping that resistance into support, likely leads to a retest of the 2023 lows at 99 before any further downside becomes probable. Looking at daily momentum here, we do look very much on the verge of a breakdown, and I think the short-term path will be much clearer by next Monday...
SPX:
Price: $6594
Weekly:
Looking at the weekly timeframe for SPX, is there really much that needs saying here? We are in price discovery, with bullish weekly momentum and structure and no signs of exhaustion. Price continues to make new all-time highs and last week saw equities push firmly through local resistance and rally into the close. I do think as we move into quarterly close we could see some profit-taking take place but this very much looks like it is set up for continuation into year-end, and I want to look for opportunities to add going into mid-October. If we see some rejection post-Opex and start breaking lower, back below 6520, I would expect some lower levels to be tested during that window of weakness, with the equal lows around 6340 likely a magnet. Ultimately, I do expect we test the 7000 level sometime in Q1 next year.
Daily:
Looking at the daily, I've just roughly mapped out how a possible bull trap into the window of weakness could lead to a post-Opex pullback into mid-October, where we could see animal spirits build from last week into Friday and then price break below trendline support next week, trapping late longs. I would expect the lows around 6340 to be swept if we do get that pullback, with any move below that an opportunity to add heavily, with 6200 as a major support level should we be so lucky. Given sentiment and positioning continuing to point towards a wall of worry and a hated rally, I think the pullback will be shallower than many expect and I think we would be very lucky to get that 6200 level again this year. This pullback view is invalidated if we do not flip that trendline into resistance going into end-of-month, and I think we could just continue to grind higher with these 2-3% retracements all the way if we get through to mid-Oct without a major breakdown.
OTHERS
Price: $323bn
OTHERS/USD
Weekly:
Beginning with the weekly for OTHERS, we can see that alts continue to grind higher vs the Dollar, with last week seeing alts rally off the open, having reclaimed $300bn as support, pushing into the 2025 open below which the market rejected. Zooming out, momentum and structure here are eerily similar to Q3 2023 for alts, with that weekly higher-low preceding a period of upwards drift before two more aggressive legs of upside from Q4 2023 into Q1 2024. My current view is that there are many parallels with that H2 2023 period beyond just price-action and whilst I do think there is a window of weakness ahead into early-mid Oct, where obviously alts are likely to be more susceptible to downside, we are in a different market regime to the March 2024 and Dec 2024 tops. As outlined in previous posts and on X, we are also seeing resilience from alts in the form of divergences vs BTC that were apparent in Sept 2021, Jan 2021 and July 2017, all of which preceded the late-cycle dynamics. Looking at this, I think there is a good chance we get one more push lower into the first week of October and then acceptance above the 2025 open leads to a leg higher towards the December 2024 high and 2021 highs between $450bn-$490bn into year-end, where I think it is likely we get a brutal shakeout similar to Jan 2024 before a final period of price discovery above $500bn in Q1 2026. That is my higher timeframe view as it stands.
Daily:
Dropping into the daily, we can see that daily structure is bullish here but we wicked above the 2025 open and rejected, leading to a pullback early this week into prior resistance around $320bn. If we break and close back below $320bn here, I think we get that bear trap into early October, likely wicking below the September open at $290bn before making another attempt at a yearly open breakout. Acceptance above the yearly open = accelerate higher. None of this looks bearish unless we lose the August low at $260bn.
OTHERS/BTC
Weekly:
So, looking at OTHERS/BTC, we can see that alts are doing relatively well at present but have pushed right into that multi-year pivot right below 3mn BTC, currently sat around 2.8mn BTC. This is the level around which alts have historically found major support or resistance vs BTC, and I continue to be of the view that acceptance above this level will come in Q4 and that will lead to the more typical broad-based outperformance of alts that people having been awaiting all cycle. If we get a similar pattern of outperformance to previous cycles, this would mean a sharp rally higher towards 4.4mn BTC into year-end, followed by a brutal shakeout and then a final leg higher above the 200wMA. If we reject here and then break below 2.3mn BTC as reclaimed support, this view is invalidated and we likely continue lower to fresh cycle lows below 2.1mn BTC. We should be forming a higher-low into October before flipping 3mn BTC into support if this is to play out as currently expected.
Daily:
Finally, looking at the daily, we can see that price is rejecting right around the confluence of resistance at the 360dMA, above which alts have not traded vs BTC since December 2024, which itself was very brief. I do think this is where we should see some downside, but OTHERS/BTC should then find support above the 200dMA before retesting and breaking out above this cluster of resistance into 3mn BTC and beyond. Above that level, I think we very quickly run higher towards 3.6mn BTC, with 4.4mn BTC as the target beyond that. This is objectively the best altcoins have looked since late 2023 for sustained outperformance so let's get through this potential window of weakness and see how market structure looks in October...
I hope you've found some value in the read this week!
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