Playbook 2018-09: ETHUSD
Updated
Monthly Playbook Longterm Outlook for ETHUSD
- Note chart is inverse
- Major price points are outlined in (blue). These are areas in which support/resistance/consolidation are expected.
- Technical Sentiment: Bearish
- Reversal pivot points: $360/380/400
- Major Demand Zone(s): $150-180
- Major Supply Zone(s): $275-300; $360-380; $400-420
Trading Strategy
- Assuming trend is intact, target short entries are at $240-250 and the Volume Profile POC @ $275. Cover targets are at $200/$180/$150.
- Trend may be compromised if price action crosses the 4HR Auto Fibb median.
- No shorting below $250. No longing above $275. Going aginst these no-trade trigger points requires documented exceptions and/or interim updates to the playbook
- Start accumulating spot @ ~$180, while maintaining low leverage on margin long entries starting at $180 such that liquidation price remains below $100.
Important Notes to Keep in Mind
- Entering major capitulation zone in which major whipsaws should be expected, if not regularly anticipated. As such, refrain from break-out trades in the event of whipsaw rejections in either direction.
- Unless scalping (trade duration < 4-6 hours), do not recommend trading on any time frame lower than the 2HR
- While we have major dynamic support in the $180 range, market capitulation could drive prices to $150 depths. No panicking allowed.
Technical Analysis Review
September price action kicks off an impulsive bearish move with staggering momentum from $400 to $250 in mere days. With a bearish pennant continuation pattern, dynamic support broke going into the first week of September, with prices crashing 25%+ in less than 4 hours. Momentum behind the sell-off was swift and bloody - making it extremely difficult to enter a short before prices were already sitting at weekly support of $250. What we see now is strict consolidation, if not just a break in selling pressure.
The collapse in support at $250 is profound, with measured move target prices pointing to $180, even $150. While ETHUSD has continuously completed near perfect measured moves thus far, we acknowledge the presence of an extremely long-term dynamic support/resistance line in the $170-180 range, not to mention the overall psychological significance of the $200 support zone. With that said, we should look to start covering on short positions as price action approaches $200. Below $200 and into $180 we should have 80% of any short positions completely covered, if not already starting to build a long position.
Assuming the general market direction is correct and price action is to gravitate down - the landing approach sub-$200 levels will be critical when it comes to managing target long entries. Playbook strategy is as follows:
- Violent moves continue to pierce lower with volume and momentum both supporting the moves. In this instance, any long $180 should be treated as a potential short term scalp, target exit of $200. Prices range $180-200 until one last capitulation plunges market to <$150. Then, long it rambo-style.
- Price continues to grind and range in tight consolidation zones. At $200, look for onset of some bullish divergence. If it's just the first instance of it, then we're probably still going lower, but we can probably expect a manageable descent into $180 with plenty of time to assess market conditions to determine if the bottom is in, or we still anticipate $150. If at $180 we observe strong bullish divergence, then prepare to hold the long going into October, even if prices do test $150. With strong bullish divergence at $180, then a move to $150 would be statistical over-extension, and we should already be adding to an existing position entered at $180. Purpose of this discipline is to avoid the chop that should be anticipated at these major capitulation points.
- Long-term Elliott Wave interpretation hints to the possibility of a few stellar trading setups: specifically, catching the short mid Wave 3. Then, if projections are correct, amazing swing trades going into Wave 4 (cover short, go long), and then again going into Wave 5 (close long, go short). The EW projection is meant to be a generalized expectation of overall price action movement, with its major fault/weakness being its subjective bias/interpretation of the wave structures. This is meant to serve as a guide for keeping in mind the difference between a intra/inter day pullback, short term correction, and overall trend reversal. In other words: even though we are buyers sub $200, we should be sellers again at major supply zones, such as $350-400, with sights on making lower lows eventually.
- Indicator Notes: Flowrate Strategy currently showing an extremely bearish outlook - with selling pressure only strengthening. Monitor this on the 2HR/4HR for any bullish divergence and/or hidden bearish divergence for further continuation patterns. Price momentum has entered extremely oversold levels - but with having entered into this region with the impulse move to $250, this seems to only support/acknowledge the strength in this bearish grip on the market. 4HR TK crosses (or on the 2HR Double) should be taken seriously. 8HR TK crosses should be interpreted as a market reversal, unless price is ranging/sideways - then it's more of a go no position + counter-trade the market signal. When in doubt, consider the 4HR Auto Fibb: above the median - trend is intact, below the median - trend is compromised. Any sideways movements should be taken advantage of with market maker bots, making sure to set buy/sell points in accordance to 4HR Auto Fibb high & low extension boundaries. When in doubt, defer to 12/26/66/144/233 EMA spread: bullish? bearish? consolidation? As well as the 4HR/8HR/1D clouds: TK cross? Cloud twist?
- Note chart is inverse
- Major price points are outlined in (blue). These are areas in which support/resistance/consolidation are expected.
- Technical Sentiment: Bearish
- Reversal pivot points: $360/380/400
- Major Demand Zone(s): $150-180
- Major Supply Zone(s): $275-300; $360-380; $400-420
Trading Strategy
- Assuming trend is intact, target short entries are at $240-250 and the Volume Profile POC @ $275. Cover targets are at $200/$180/$150.
- Trend may be compromised if price action crosses the 4HR Auto Fibb median.
- No shorting below $250. No longing above $275. Going aginst these no-trade trigger points requires documented exceptions and/or interim updates to the playbook
- Start accumulating spot @ ~$180, while maintaining low leverage on margin long entries starting at $180 such that liquidation price remains below $100.
Important Notes to Keep in Mind
- Entering major capitulation zone in which major whipsaws should be expected, if not regularly anticipated. As such, refrain from break-out trades in the event of whipsaw rejections in either direction.
- Unless scalping (trade duration < 4-6 hours), do not recommend trading on any time frame lower than the 2HR
- While we have major dynamic support in the $180 range, market capitulation could drive prices to $150 depths. No panicking allowed.
Technical Analysis Review
September price action kicks off an impulsive bearish move with staggering momentum from $400 to $250 in mere days. With a bearish pennant continuation pattern, dynamic support broke going into the first week of September, with prices crashing 25%+ in less than 4 hours. Momentum behind the sell-off was swift and bloody - making it extremely difficult to enter a short before prices were already sitting at weekly support of $250. What we see now is strict consolidation, if not just a break in selling pressure.
The collapse in support at $250 is profound, with measured move target prices pointing to $180, even $150. While ETHUSD has continuously completed near perfect measured moves thus far, we acknowledge the presence of an extremely long-term dynamic support/resistance line in the $170-180 range, not to mention the overall psychological significance of the $200 support zone. With that said, we should look to start covering on short positions as price action approaches $200. Below $200 and into $180 we should have 80% of any short positions completely covered, if not already starting to build a long position.
Assuming the general market direction is correct and price action is to gravitate down - the landing approach sub-$200 levels will be critical when it comes to managing target long entries. Playbook strategy is as follows:
- Violent moves continue to pierce lower with volume and momentum both supporting the moves. In this instance, any long $180 should be treated as a potential short term scalp, target exit of $200. Prices range $180-200 until one last capitulation plunges market to <$150. Then, long it rambo-style.
- Price continues to grind and range in tight consolidation zones. At $200, look for onset of some bullish divergence. If it's just the first instance of it, then we're probably still going lower, but we can probably expect a manageable descent into $180 with plenty of time to assess market conditions to determine if the bottom is in, or we still anticipate $150. If at $180 we observe strong bullish divergence, then prepare to hold the long going into October, even if prices do test $150. With strong bullish divergence at $180, then a move to $150 would be statistical over-extension, and we should already be adding to an existing position entered at $180. Purpose of this discipline is to avoid the chop that should be anticipated at these major capitulation points.
- Long-term Elliott Wave interpretation hints to the possibility of a few stellar trading setups: specifically, catching the short mid Wave 3. Then, if projections are correct, amazing swing trades going into Wave 4 (cover short, go long), and then again going into Wave 5 (close long, go short). The EW projection is meant to be a generalized expectation of overall price action movement, with its major fault/weakness being its subjective bias/interpretation of the wave structures. This is meant to serve as a guide for keeping in mind the difference between a intra/inter day pullback, short term correction, and overall trend reversal. In other words: even though we are buyers sub $200, we should be sellers again at major supply zones, such as $350-400, with sights on making lower lows eventually.
- Indicator Notes: Flowrate Strategy currently showing an extremely bearish outlook - with selling pressure only strengthening. Monitor this on the 2HR/4HR for any bullish divergence and/or hidden bearish divergence for further continuation patterns. Price momentum has entered extremely oversold levels - but with having entered into this region with the impulse move to $250, this seems to only support/acknowledge the strength in this bearish grip on the market. 4HR TK crosses (or on the 2HR Double) should be taken seriously. 8HR TK crosses should be interpreted as a market reversal, unless price is ranging/sideways - then it's more of a go no position + counter-trade the market signal. When in doubt, consider the 4HR Auto Fibb: above the median - trend is intact, below the median - trend is compromised. Any sideways movements should be taken advantage of with market maker bots, making sure to set buy/sell points in accordance to 4HR Auto Fibb high & low extension boundaries. When in doubt, defer to 12/26/66/144/233 EMA spread: bullish? bearish? consolidation? As well as the 4HR/8HR/1D clouds: TK cross? Cloud twist?
Note
Update:- Primary price targets hit. Exited short, flipped long.
- So far, so good. Selling pressure remains strong though - so can and will expect some consolidation.
- We saw a tick up in buying pressure/momentum, but should keep in mind this very well was a short shakeout on BitMex, as we saw some fairly substantial liquidations (multiple 1MM+ orders) with the impulsive move from $170 to $180.
- Will HODL the long, even if support is breached. Should not let emotions influence our trading strategy, even if prices approach $150/130.
- Our worst case scenario is that we have an over-extended shakeout, $158 and below. With that said, recommend only holding 25% long position, until reversal is confirmed. At that point, we should cautiously add to our position and support the movement, up until $220. $200 will prove to be substantial resistance, with volume profile VWAP and POC ranging $190-220. Were a lot of buyers there that are now trapped, so anticipate retail investors to only add to the price suppression.
- Spot: continue buying on support. Ideally, we're able to fill our long position 100% prior to $200, if not with overextended moves below our primary accumulation zone at $170 (towards $130-160)
- Margin: be extremely cautious, only adding to long on support. With an overextended move below $170, have 50% of long position filled, just in case of any complete unanticipated panic sell offs that push the price well beyond what we even anticipate here. Build the remainder of the position once a confirmed reversal is registered, up until $200.
- Chart update: everything played out a little quicker than I anticipated. I have updated the EW lines to reflect the update. I have added 2 red horizontal lines to reflect very likely price points where rejection may occur, opposed to our ideal Wave 4 correction, which technically breaches the current price channel.
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