ETHUSD Higher Low And Long Entry.
Updated
ETHUSD update: I am LONG from 420.27 with a STOP at 396.45 and TARGET at 453. Reward/risk: 1.4/1. The entry criteria has been met for a swing trade long. (Trade was posted as an update in my previous report). I will explain the thought process further.
As I wrote in my previous summary, buying into a pullback within a broader bullish trend is in line with my swing trade plan, BUT there has to be some form of confirmation. That confirmation has appeared,and as a trader, I have done my part: followed my plan, now the rest is up to the market.
As far as levels go, the 422 to 400 area is the .618 support zone of the recent bullish swing. That was the first point of interest, but not enough for an entry. I wrote about the 391 level and how I wanted to see a reversal formation between there and 361. 391 held and the higher low formation has appeared around the 400 level along with a newly established broader double bottom formation off of 391. A higher low on a smaller time frame off of a larger double bottom in a generally strong market is in line with my plan. Even if this trade stops out, I waited for everything to line up in my favor. Having these definitions and letting the market prove itself is better than buying too early and not knowing if this market is going to hold or collapse. At least I have structural evidence that suggests the bearish scenario is now much less likely.
Why 453 target and not 500? (Or some other ridiculous number like 1k?) IF the market offers the opportunity to sell at 453 quickly. I will exit half the my position, and trail my stop manually from there. I try to lock in some profit and reduce risk as soon as soon as my plan calls for it. I chose 453 because it is just below the 455 old support/new resistance level and in the middle of a .618 resistance area of the recent bearish swing. Since this market is generally bullish, there is a better chance that price breaks above that zone and retests the 500 high, so I intend to hold some for that possibility.
I don't know if my trade will work out, all I know is that the factors for the outcome that I am looking for are now in line. That is the purpose of a trading plan. I don't have to think, or worry, everything is defined ahead of time, from the entry, to the management to the exit. The hardest part is WAITING, as many people do not have the patience, especially when markets like BTC go to 17k in a matter of a couple of days.
I suspected this market retraced because of the BTC spectacle but that is just a hunch. If this market has retraced because of congestion over some cat game on the blockchain then that is not really a good sign in my opinion. How is it going to handle serious applications where there is a lot more at stake? As a short term trader, I really don't care why, because I am not trading on that information. I used to trade stocks of companies that produced nothing. It is price momentum that I am interested in and that's it.
In summary, I am simply following my plan and that is the best I can do. Now I just have to manage the trade as the market unfolds. Things change fast and that is why a well defined plan is so important because it enforces rules and minimizes emotions. Many new traders are soon going to learn the realities of trading. BTC is lala land, no skill is required to buy and hold. When that market returns to reality that is where the skilled traders will step in and capitalize on all the bad habits and euphoria that is running rampant in that market. A 5K move in 5 days without a retrace is a breeding ground for unrealistic expectations. Learn to structure your decision making process, and no matter what conditions you face, you will at least align yourself with the probabilities while at the same time knowing how to constantly adjust for risk. As much as people criticize TA, it at least provides the tools to build a framework for consistency.
Comments and questions welcome.
As I wrote in my previous summary, buying into a pullback within a broader bullish trend is in line with my swing trade plan, BUT there has to be some form of confirmation. That confirmation has appeared,and as a trader, I have done my part: followed my plan, now the rest is up to the market.
As far as levels go, the 422 to 400 area is the .618 support zone of the recent bullish swing. That was the first point of interest, but not enough for an entry. I wrote about the 391 level and how I wanted to see a reversal formation between there and 361. 391 held and the higher low formation has appeared around the 400 level along with a newly established broader double bottom formation off of 391. A higher low on a smaller time frame off of a larger double bottom in a generally strong market is in line with my plan. Even if this trade stops out, I waited for everything to line up in my favor. Having these definitions and letting the market prove itself is better than buying too early and not knowing if this market is going to hold or collapse. At least I have structural evidence that suggests the bearish scenario is now much less likely.
Why 453 target and not 500? (Or some other ridiculous number like 1k?) IF the market offers the opportunity to sell at 453 quickly. I will exit half the my position, and trail my stop manually from there. I try to lock in some profit and reduce risk as soon as soon as my plan calls for it. I chose 453 because it is just below the 455 old support/new resistance level and in the middle of a .618 resistance area of the recent bearish swing. Since this market is generally bullish, there is a better chance that price breaks above that zone and retests the 500 high, so I intend to hold some for that possibility.
I don't know if my trade will work out, all I know is that the factors for the outcome that I am looking for are now in line. That is the purpose of a trading plan. I don't have to think, or worry, everything is defined ahead of time, from the entry, to the management to the exit. The hardest part is WAITING, as many people do not have the patience, especially when markets like BTC go to 17k in a matter of a couple of days.
I suspected this market retraced because of the BTC spectacle but that is just a hunch. If this market has retraced because of congestion over some cat game on the blockchain then that is not really a good sign in my opinion. How is it going to handle serious applications where there is a lot more at stake? As a short term trader, I really don't care why, because I am not trading on that information. I used to trade stocks of companies that produced nothing. It is price momentum that I am interested in and that's it.
In summary, I am simply following my plan and that is the best I can do. Now I just have to manage the trade as the market unfolds. Things change fast and that is why a well defined plan is so important because it enforces rules and minimizes emotions. Many new traders are soon going to learn the realities of trading. BTC is lala land, no skill is required to buy and hold. When that market returns to reality that is where the skilled traders will step in and capitalize on all the bad habits and euphoria that is running rampant in that market. A 5K move in 5 days without a retrace is a breeding ground for unrealistic expectations. Learn to structure your decision making process, and no matter what conditions you face, you will at least align yourself with the probabilities while at the same time knowing how to constantly adjust for risk. As much as people criticize TA, it at least provides the tools to build a framework for consistency.
Comments and questions welcome.
Note
Sold 50% at 445.53 for +25. Stop moved to break even. Trade is risk free.Note
I cancelled the limit order at 453.Note
Placed limit order to exit other half of my position at 480.
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