ETHUSD: Broken Support But Great Place For A Reversal.
ETHUSD Update: Major support at 246 area is broken. A sign of continued short term weakness ahead. I am still bullish long term. During these type of corrections within a larger bullish trend, it can be very easy to get sucked into buying too early, especially when very opinionated. One less bearish observation that I can make about the current price action is even though 246 has been broken, price has not gone dramatically lower and may be in the process of forming a broader double bottom.
If this formation presents itself, this general area of 238 to 246 may offer an early buying opportunity. If price breaks below 238, the next major support area is 229, which again will have to show a broader bottoming process before I even think of getting long. There are quite a few key resistance areas that need to be compromised before I can consider short term momentum to be bullish again. The major ones that will change my outlook back to bullish are 262 and 269. Unless those are taken out, price is likely to persist lower, or to consolidate.
I am still not comfortable shorting because the major trend is not bearish yet. The conservative plan is to wait for the pivot resistances to break before considering a long and until then stay flat. A more aggressive variation is to wait for a bottoming formation like a double bottom or higher low somewhere between 245 and 230, put on 25% of my regular position size and if the reversal follows through and price starts breaking the pivot resistances, I can then evaluate my targets, add to the position and adjust my risk. My aggressive entry will all depend on the quality of the formation. Otherwise I will simply wait it out for real buying to come back.
At the moment the only reference point I have to measure risk is the 239 low. If I happen to get long with a small position, the risk is reduced if I am stopped out below 239. I'm not using 245 as my risk point because it was broken (red arrow) and momentum is bearish. I am not going to consider it a reliable support for the type of trade I am contemplating. This update is to share my thoughts based on the price action at the moment. Since it is a holiday here in the US, I probably won't post any detailed updates until after the holiday. If I happen to enter on my aggressive scenario, I will attempt to update this post.
If this formation presents itself, this general area of 238 to 246 may offer an early buying opportunity. If price breaks below 238, the next major support area is 229, which again will have to show a broader bottoming process before I even think of getting long. There are quite a few key resistance areas that need to be compromised before I can consider short term momentum to be bullish again. The major ones that will change my outlook back to bullish are 262 and 269. Unless those are taken out, price is likely to persist lower, or to consolidate.
I am still not comfortable shorting because the major trend is not bearish yet. The conservative plan is to wait for the pivot resistances to break before considering a long and until then stay flat. A more aggressive variation is to wait for a bottoming formation like a double bottom or higher low somewhere between 245 and 230, put on 25% of my regular position size and if the reversal follows through and price starts breaking the pivot resistances, I can then evaluate my targets, add to the position and adjust my risk. My aggressive entry will all depend on the quality of the formation. Otherwise I will simply wait it out for real buying to come back.
At the moment the only reference point I have to measure risk is the 239 low. If I happen to get long with a small position, the risk is reduced if I am stopped out below 239. I'm not using 245 as my risk point because it was broken (red arrow) and momentum is bearish. I am not going to consider it a reliable support for the type of trade I am contemplating. This update is to share my thoughts based on the price action at the moment. Since it is a holiday here in the US, I probably won't post any detailed updates until after the holiday. If I happen to enter on my aggressive scenario, I will attempt to update this post.
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