ETHUSD Perspective And Levels: Bearish Momentum And 260 Support.
ETHUSD Update: The 271 level has been taken out as bearish momentum slowly works it's way back into the price action. If price takes out the 260 support (.382 of current bullish swing) then this market is more likely to retest the 237 to 219 support zone (.618 of current bullish swing). If price is going to get extreme, like I have been writing about in recent reports, a strong catalyst will be required to push price faster.
I recently evaluated the BTCUSD and LTCUSD markets and the charts look the same. Momentum is bearish, and although the underlying bullish price structure has not been taken out yet (260 and 237 to 219 support areas in this market), any fundamental surprise will push these markets through these levels because the current resistance zone (271 to 291) is now a lower high. As we know by now, lower highs lead to lower lows which means there is less of the chance that the current support levels hold, and more of a chance they break.
And a lower low within this context points to a Wave 5 of C which can take all these markets to retest the extremes (see LTC report). Now will this happen for sure? No one knows, and one scenario that will make for more of a bullish argument is if price can find support above 260 and then break back above the 278 level which is the .382 of the current minor bearish swing. Such a break would indicate the price is still range bound rather than bearish.
If anything, buying at the current levels, and even the 260 support area carries more risk than is worth taking. The lower high that has been established in the 271 to 291 area means price needs to clearly break above the zone to open any possibility of seeing the mid to high 300s again.
So in this market, I am only interested in buying in the following two scenarios: the extreme price scenario where the market retests the low 200s or lower. This is not a swing trade and does not have any stop, because risk will be managed through careful position sizing. (Just liked I explained in my LTC report). There is no setup for this, and no buying the bottom. IF price gets near the lows, especially quickly, I will start accumulating (core position for multi year hold.)
The second scenario is the SWING TRADE setup within the 237 to 219 support zone. If I see a double bottom or higher low on a smaller time frame (30 Min) in that zone, I am willing to put on a long with a stop about 5 points below THE FIRST LOW of the SMALLER TIME FRAME reversal formation. The stop should not be more than 25 points of risk while my target will be in the mid 270s. Risk reward should be greater than 1:1. If price falls through the support zone with no setup, I will stay flat and watch for the first scenario. If this is confusing, just stay flat.
You may wonder "Why anticipate a sharp bullish reversal off the 237 to 219 support when we are more likely in a bearish Wave 5 and supports are expected to break? The reason is there is an overlapping support zone. The 237 to 219 is within the broad 233 to 190 zone which has clearly attracted enough buyers to squeeze price back up to the 290s even in the face of extreme bearish momentum. I am simply looking for history to repeat itself.
In summary, the coin markets in general looked poised to revisit lows and I am preparing for multiple scenarios by utilizing different strategies, Each strategy (position trade, swing trade) has it's own separate risk parameters and management style and it is important to understand this. If you don't then you will take risks that are not proportional to your account size. I try my best to explain my thought process to help you shape your own plan. This isn't a prediction or advice, it is a perspective. Also remember I am anticipating two scenarios out of limitless possibilities and I am NOT trying to be right, I am trying to be prepared, and most importantly FLEXIBLE by constantly adjusting to new information.
Comments and questions welcome.
I recently evaluated the BTCUSD and LTCUSD markets and the charts look the same. Momentum is bearish, and although the underlying bullish price structure has not been taken out yet (260 and 237 to 219 support areas in this market), any fundamental surprise will push these markets through these levels because the current resistance zone (271 to 291) is now a lower high. As we know by now, lower highs lead to lower lows which means there is less of the chance that the current support levels hold, and more of a chance they break.
And a lower low within this context points to a Wave 5 of C which can take all these markets to retest the extremes (see LTC report). Now will this happen for sure? No one knows, and one scenario that will make for more of a bullish argument is if price can find support above 260 and then break back above the 278 level which is the .382 of the current minor bearish swing. Such a break would indicate the price is still range bound rather than bearish.
If anything, buying at the current levels, and even the 260 support area carries more risk than is worth taking. The lower high that has been established in the 271 to 291 area means price needs to clearly break above the zone to open any possibility of seeing the mid to high 300s again.
So in this market, I am only interested in buying in the following two scenarios: the extreme price scenario where the market retests the low 200s or lower. This is not a swing trade and does not have any stop, because risk will be managed through careful position sizing. (Just liked I explained in my LTC report). There is no setup for this, and no buying the bottom. IF price gets near the lows, especially quickly, I will start accumulating (core position for multi year hold.)
The second scenario is the SWING TRADE setup within the 237 to 219 support zone. If I see a double bottom or higher low on a smaller time frame (30 Min) in that zone, I am willing to put on a long with a stop about 5 points below THE FIRST LOW of the SMALLER TIME FRAME reversal formation. The stop should not be more than 25 points of risk while my target will be in the mid 270s. Risk reward should be greater than 1:1. If price falls through the support zone with no setup, I will stay flat and watch for the first scenario. If this is confusing, just stay flat.
You may wonder "Why anticipate a sharp bullish reversal off the 237 to 219 support when we are more likely in a bearish Wave 5 and supports are expected to break? The reason is there is an overlapping support zone. The 237 to 219 is within the broad 233 to 190 zone which has clearly attracted enough buyers to squeeze price back up to the 290s even in the face of extreme bearish momentum. I am simply looking for history to repeat itself.
In summary, the coin markets in general looked poised to revisit lows and I am preparing for multiple scenarios by utilizing different strategies, Each strategy (position trade, swing trade) has it's own separate risk parameters and management style and it is important to understand this. If you don't then you will take risks that are not proportional to your account size. I try my best to explain my thought process to help you shape your own plan. This isn't a prediction or advice, it is a perspective. Also remember I am anticipating two scenarios out of limitless possibilities and I am NOT trying to be right, I am trying to be prepared, and most importantly FLEXIBLE by constantly adjusting to new information.
Comments and questions welcome.
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