ETHEREUM: catching the falling knife
Updated
TLDR: Trade Idea: Buy ETH at ~$200, sell at ~$450
I've been trying my hand at spot trading on Poloniex the past few days, and it kind of sucks. The 15 minute/ 1 hour charts are so much noise, that I can't tell whether something is a flag, pennant, up or down until it's too late. Maybe it's because I'm a novice day trader and I don't see it yet, or maybe because on a micro scale crypto patterns are random. However when we zoom out to the big picture charts start to tell a story.
Take NEO for example. Neo has been in this extremely regular pattern of
down ~70%, up ~125%,
down 70%, up ~115%,
down 70%, up ~75%
down 70%, up ~50% (this week)
I'm seeing the same pattern emerging with Ethereum. Maybe it's because financial markets act according to some deterministic law of nature, like musical notes or the way Fibonacci numbers are found in plants and seashells. Or maybe the patterned price action we see in crypto isbecause the Illuminati got together and orchestrated a nefarious plan to pump and dump coins like NEO until they milk a combined 400+% cumulative profits out of bagholders ON THE KNIFE. Regardless, I think it's worth taking up an Ethereum position at $210 with a $190 stop loss.
If we buy at $210 and sell at $428, with a stop loss at $190:
Risk: 9.52%
Reward: 103.81%
Risk/Reward: 10.90
Break-even win rate: 30.74%
I'm calling $200 the next floor, because of a combination of these indicators:
1) If you draw a fib retracement from $1400 to $200 it matches up with many floors on the current downtrend. ($300 was also a contender, but it's been broken. $100 is also a contender, but who wants to wait that long for the next buy in.)
2) The percentage of a drop from the previous high of $800 ($830 to be exact) to $200 (-75%) matches the previous % drop.
3) It's a psychologically significant amount. Cryptos gravitate towards whole numbers. (1400 was ETH's peak.) While it's possible $250 is the bottom of the current channel, $200 or $100 is more likely, especially if Bitcoin continues to fall in the current wave, which I think it will.
4) The rally fits in with the Bitcoin pattern forming on the logarithmic chart
Conclusion:
Is there a >30.74% chance Ethereum will retrace to $428? If so, it's worth taking this trade. I (off-the-cuff) estimate there is a 50% chance we will surpass $428 within the next month, and a 90% chance within the next year. Ethereum peaked at $1400... Even if we miss this time frame, don't you think Ethereum has a >90% chance of retracing to 11/2017 prices, when sharding comes out? That's why I'm long on Ethereum at $210, stop loss $190.
I've been trying my hand at spot trading on Poloniex the past few days, and it kind of sucks. The 15 minute/ 1 hour charts are so much noise, that I can't tell whether something is a flag, pennant, up or down until it's too late. Maybe it's because I'm a novice day trader and I don't see it yet, or maybe because on a micro scale crypto patterns are random. However when we zoom out to the big picture charts start to tell a story.
Take NEO for example. Neo has been in this extremely regular pattern of
down ~70%, up ~125%,
down 70%, up ~115%,
down 70%, up ~75%
down 70%, up ~50% (this week)
I'm seeing the same pattern emerging with Ethereum. Maybe it's because financial markets act according to some deterministic law of nature, like musical notes or the way Fibonacci numbers are found in plants and seashells. Or maybe the patterned price action we see in crypto isbecause the Illuminati got together and orchestrated a nefarious plan to pump and dump coins like NEO until they milk a combined 400+% cumulative profits out of bagholders ON THE KNIFE. Regardless, I think it's worth taking up an Ethereum position at $210 with a $190 stop loss.
If we buy at $210 and sell at $428, with a stop loss at $190:
Risk: 9.52%
Reward: 103.81%
Risk/Reward: 10.90
Break-even win rate: 30.74%
I'm calling $200 the next floor, because of a combination of these indicators:
1) If you draw a fib retracement from $1400 to $200 it matches up with many floors on the current downtrend. ($300 was also a contender, but it's been broken. $100 is also a contender, but who wants to wait that long for the next buy in.)
2) The percentage of a drop from the previous high of $800 ($830 to be exact) to $200 (-75%) matches the previous % drop.
3) It's a psychologically significant amount. Cryptos gravitate towards whole numbers. (1400 was ETH's peak.) While it's possible $250 is the bottom of the current channel, $200 or $100 is more likely, especially if Bitcoin continues to fall in the current wave, which I think it will.
4) The rally fits in with the Bitcoin pattern forming on the logarithmic chart
Conclusion:
Is there a >30.74% chance Ethereum will retrace to $428? If so, it's worth taking this trade. I (off-the-cuff) estimate there is a 50% chance we will surpass $428 within the next month, and a 90% chance within the next year. Ethereum peaked at $1400... Even if we miss this time frame, don't you think Ethereum has a >90% chance of retracing to 11/2017 prices, when sharding comes out? That's why I'm long on Ethereum at $210, stop loss $190.
Note
After taking another look at NEO I've updated this idea.NEO always fell ~66.6% but bounced successively smaller. (125%,100%,75%,50%)
If we take percentages as our strongest indicator for NEO and ETH, and based on that super clean -75% fractal and the fact we are approaching -75% in ETH's channel while Bitcoin is nearing the bottom of a channel, I have a hunch we should trust percentages over fibs, and other indicators.
SO, here's the updated plan:
buy in: 209.4 (200+ 4.7%)
sell: 398.12 (400 - .47%)
stop: 190.60 (200- 4.7%)
(If someone has a better method of calculating buy in and selling points, please share, buy 47 is the atomic # of AG and my magic number)
Risk: 8.97%
Reward: 90.12%
Risk/Reward: 10.04
Break-even win rate: <33.3% which is good enough for me
What do you think about Ethereum? Are my indicators any good? Do you plan to catch the falling knife?
-M@
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