TL:DR - I am looking to go long with laddered buys once we break the downtrend line and the $730 resistance. Watch for the 50% support zone or even a H&S reversal to to the $480-$500 area.
Back to the Eth:USD chart with 4h candles. I have adjusted the overhead resistance line with the most recent price structure (the local peak at about $745). We are in a support area that is attractive to me for opening a Long because we are in a strong support zone. I have concerns, however, as we have overhead resistance in the form of the downtrend line right around the $700 range as well as the highly reactive $730 price which is currently acting as resistance.
My current plan is to enter laddered buy orders at $706 and $738. Tight stop losses will be needed as there is still a good chance of a breakdown, after all the current trend is bearish and the riskiest trades are the ones that are counter-trend.
I target $705 because that will give me comfort we have broken the resistance of the downward trend line. I target $738 because that will give me comfort we have broken the $730 resistance. If we go there will I miss out on some of the upside? Yes. I'm ok with that.
If this support area breaks, which is likely as it would be a continuation of the current trend, then I will look to $605 for support and potential buying as it is a 50% retracement of the most recent bullish structure.
I see a lot of chartist saying Eth has developed a head and shoulders pattern starting 4/24 through yesterday. The price target of this head and shoulders would take us all the was to around $480-$500. I'm not convinced this is a valid H&S formation for two reasons: (1) the volume does not support this pattern, we can see good buy volume on 5/14 showing there are still buyers in this market (2) What are we reversing? A 2 week uptrend? I just don't see it. I only bring up this potential H&S pattern because many others have and I want to be prepared in case it is valid.
***This is not investing advice. I am not an investing professional. All investors should seek guidance from licensed financial advisers and not random people on the internet.***
Back to the Eth:USD chart with 4h candles. I have adjusted the overhead resistance line with the most recent price structure (the local peak at about $745). We are in a support area that is attractive to me for opening a Long because we are in a strong support zone. I have concerns, however, as we have overhead resistance in the form of the downtrend line right around the $700 range as well as the highly reactive $730 price which is currently acting as resistance.
My current plan is to enter laddered buy orders at $706 and $738. Tight stop losses will be needed as there is still a good chance of a breakdown, after all the current trend is bearish and the riskiest trades are the ones that are counter-trend.
I target $705 because that will give me comfort we have broken the resistance of the downward trend line. I target $738 because that will give me comfort we have broken the $730 resistance. If we go there will I miss out on some of the upside? Yes. I'm ok with that.
If this support area breaks, which is likely as it would be a continuation of the current trend, then I will look to $605 for support and potential buying as it is a 50% retracement of the most recent bullish structure.
I see a lot of chartist saying Eth has developed a head and shoulders pattern starting 4/24 through yesterday. The price target of this head and shoulders would take us all the was to around $480-$500. I'm not convinced this is a valid H&S formation for two reasons: (1) the volume does not support this pattern, we can see good buy volume on 5/14 showing there are still buyers in this market (2) What are we reversing? A 2 week uptrend? I just don't see it. I only bring up this potential H&S pattern because many others have and I want to be prepared in case it is valid.
***This is not investing advice. I am not an investing professional. All investors should seek guidance from licensed financial advisers and not random people on the internet.***
Note
Long triggered at $706. I like this formation for many reasons: (1) we are bouncing off of the $680 support zone (2) We have broken the TENTATIVE downward trendline (3) we have a bullish engulfing candle signaling strength and even more importantly (4) we have crossed the 9 day Moving Average.Going back to late November the 9 day MA has been a powerful predictor of trend reversal. Every time we have 1 day candle that has closed while crossing the 9MA we have seen a trend reversal. If we close today above the 9MA then I am very comfortable with buying here.
That being said we have NOT closed above the 9 MA, merely penetrated it. This pattern could break down so I will set a stop loss at $689 in case this pattern does breakdown.
Next I am looking to $730
Note
Price is now behaving more like I expected. My stop loss triggered at $689 which I am very confused by. However, the bulls have prevailed for the moment and I got back in again at $706. This is a difficult problem with this market. Price can move so fast it is important to set stop-loss orders HOWEVER with the low liquidity in these market there is a great deal of noise. By noise I mean the price can move 3% down in 1 hour then 5% back up. I've had numerous stops triggered by "noise".
On the other hand it would be nice to just be able to watch the market all day and place stops manually. But I sleep 8 hours a day and have a life so that is out of the question and I am left trying to guess where to place my stop-loss orders.
We did not close above the 9 MA yesterday however today it looks very promising that we will close above it which is a bullish sign. How much higher will we go? I don't know, I'll try and update tomorrow.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.