ETHUSD: Nice Try, Long Way To Go.Ethereum update: The retrace attempt may look impressive at first glance, but the broader structure provides a more sober perspective. A move from the 160 area to 224 is nothing to sneeze at, but how much did you have to lose in the process of betting on this random event?
This is one of those situations where good is not good enough. Although the move to 224 has the impulsive traders hungry for more, both broader bearish trend lines are no where near being compromised. Like I have been writing in recent Bitcoin articles, the initial move is the most costly.
At S.C., in order for us to come off the side lines, this market needs to close above 300 at minimum. Otherwise it will have to take the time to build a much more convincing structure.
The initial move is the most costly because in order to prove itself, price needs to test a support to demonstrate the possibility of further strength. Buying too early means you are not only exposing yourself to this adverse movement, but also to the possibility of momentum continuation. Which in this case means a lower low.
In summary, market reversals are not a single event, they are a process. Now that the initial move is in place, our objective is to wait for the market to prove a broader reversal is likely. It can demonstrate that in a variety of ways with the most recognizable way being a double bottom formation.
Getting sucked into the initial move motivated by the fear of missing out is a common mistake, even if it pays a random profit. If this market probes higher, the broader structure is still not favorable for the type of swing trades we aim to take.
If this market is going to recover, it will take time to construct the evidence. Waiting for this requires patience in the face of movement that looks promising, but offers no distinct advantage. We would rather sacrifice what appears to be better prices, for conditions that are generally more favorable. This perspective specifically pertains to our swing trade methodology, and not our inventory management. We do not mix strategies.
That is how we effectively minimize losses and maintain positive longer term performance. In this game, you have the opportunity to only play when the conditions are best for you. Take advantage of it.
Beartrend
AUDJPY Breakout but Support AheadWe last posted on the AUDJPY on March 17th when we were waiting for 2 key support levels to be broken.
The first, the drawn-in pivot lows of March, have now been broken and confirmed as resistance. This would potentially offer a short entry into the trade but this is where we are applying patience and waiting for the next key support level, the round number 80, to be broken.
When placing a trade, we always look to what we are being offered in the form of reward to our risk in relation to support and resistance levels. If our criteria is not met, we stand aside. With 50 pips on offer to the round number 80, we will be standing aside.
Support and resistance levels get broken when price is in a trend and hence there is a high chance that price will break and close below 80. Once price dictates this, we will be offered a far healthier risk to reward to 70, a distance of 1000 pips. This is when we will look to strategically add compounds.
This is looking strong for a bear trend continuation but patience needed on this for now.
Any comments or questions, do not hesitate to leave them below. Hit agree if you share our sentiments!
Sublime Trading
The CHFJPY Offers Short Trade on Bear FlagThe CHFJPY has been trending very nicely since the end of January when price found resistance at the high of July 2017 just short of 119.00. Price has since fallen circa 800 pips taking price out of an area of consolidation.
I have drawn in the support zone that was acting as the base of the consolidation. In March, we have seen a classic break and retest of this support zone as resistance followed by a breakout in the form of a bear flag.
Bear flags are the preferred chart pattern for trend traders as they create linearity in the trend and offer excellent entry points into the trend. They are a strong suggestion of a continuation of the trend. We have mentioned in our previous blogs that new traders should focus on trading breakouts first as they are far easier to recognise. Trading pullbacks require a deeper understanding of trend structure and support and resistance.
Looking across all 3 timeframes:
Monthly - Inside the annual levels of 2017 but 400 pips to the 2017 low.
Weekly - Trading below the 200SMA and the 50SMA. However, inside the D52 but 400 pips to the low.
Daily - Trading below the 200SMA and 50SMA.
There is a very neat and linear trend in progress as well as alignment between the moving averages on the weekly and daily timeframes. But given that price is inside the annual levels of 2017 and the D52, trades taken should be at reduced risk.
Full risk: 2%.
Reduced risk: Less than 2%.
Our trades have been placed.
We have done our analysis and identified our edge, we have identified a high-probability setup in accordance with our trading plan, we have placed an entry and stop-loss according to the characteristics of the chart and we have allocated risk according to the strategy being used. We also have a very clear idea of how we will compound into the trend if it starts running a profit, levels that we would like to see price move towards as well as how we will follow with a trailing stop-loss and exit from the trade.
We have managed all that is in our control. It is now down to the forces of the market as to the outcome of the trade which is 100% unknown and out of control. The outcome is simply down to random statistics. But by being able to identify and repeatedly trade on a proven edge, the profit from winning trades will absorb tiny losses, be generous and life-changing.
The key is to follow the process and the let the profits flows.
Sublime Trading
AUDJPY Offering Short EntryThe AUDJPY has setup nicely for a pullback entry short into an established bear trend. This must be taken at reduced risk for the reasons mentioned below.
Monthly - Price is trading inside the annual levels of 2017 but has been in a bear trend since the start of 2018.
Weekly - Price is trading below the 200SMA and the 50SMA.
Daily - Price is trading below the 200SMA and the 50SMA.
Despite price still trading inside the 2017 level, we have alignment between the weekly and daily timeframes. Price has now also pulled back to a key level of support-turned-resistance and formed a long-wicked indecision candle which is a setup we look for when taking pullback trades.
Given that price is inside the 2017 annual levels and that this is an entry using a pullback, the risk must be reduced. Full allocation for us at Sublime Trading is 2% per trade so we have allocated a much smaller risk for this currency pair considering the setup.
We now want to see price bounce to the downside, break and close below the March low ideally in the form of a bear flag, and move towards the round number 80. We then want to see price break and close below 80 and weaken further towards 70 and beyond in the same linear trend structure. This will then offer ample opportunities to compound strategically into this initial position.
Trading PBs has its advantages and challenges. The advantage is, of course, more profit compared to entering in on a breakout. The challenge is dealing with the fact that price may trigger us into the trade but may then continue against us as price forms a reversal. Price may also trigger us in and then move into consolidation where we must then apply patience and wait for the breakout.
We must never second guess the outcome of a trade. Each time our edge appears, we must place a trade without hesitation and with the right risk allocated to it. What ever happens next is beyond our control.
Remember, a good trade is one where we follow our trading plan REGARDLESS of the outcome.
Sublime Trading
NEO USDT Bear Pennant, heading down, down, downThe bear trend will likely continue when we get to the end of this pennant. A lot of cryptos seem to be doing the same thing and pushing further down , a lot are hitting key buy zones. We will have to wait and see what NEO does here to have a better idea of the buy zone.
SPX Bear Trend intactEver since we got the bearish cross on SPX in August 2015, PA did make a new ATH but hasn't made a bullish cross! This overthrow is even more bearish imo.
The roadmap obviously shows a correction is underway for at least 50% drop if not more, but let's be conservative and estimate a drop to 2007 peak at 1576, that makes 28.17%.
We'll see what happens there. Cheers
EURUSD potential huge dropEURUSD is preparing for a potential big drop. Sellers found @ :
- 1.1250 resistance
- 50% fibonacci retracement of prior swing
Our entry is based on the 123 psichological pattern. This trade carry good reward - 1:14 risk:reward , will become at least 1:7 risk:reward after we will cover- but we should cover after a little drop for any eventuality.
This trade carry the potential to align timeframes starting from 2h until Monthly, like a domino, and renew the long term bearish trend!
I hope it will become a domino too.
GBPJPY TREND CONTINUATION TRADEHello traders, we're looking at trend continuation trade setup on GBPJPY daily chart..Obviously we still in a bearish trend because the price move from top left to bottom right of your chart..Last week the price have broke below and closed below the previous structure support..This indicate the trend continuation to the down side..The orange box is the area where I'm looking to sell this pair because there is a few structure and fibo confluences also in that area..Lower time frame will be very helpful when you want to execute the trade..Good luck traders :)
USDJPY 60min Bearish Trend Continuation Trade (TCT)This is a bearish TCT setup to get us back in the direction of the overall Bear Trend.
This trade is @ Market since we are banging up Resistance. Since we are so close to Resistance this trade gives us a good Risk/Reward.
Stops - 1 ATR above last swing high
Target #1 - Retest of Previous Lows
Target #2 - 1.27% Fib Ext
GBPUSD 60min Bearish Trend Continuation Trade (TCT)GBPUSD has been in a heavy downtrend. I'm looking to sell ALL rallies until this trend is broken.
As price pushes up into my sell zone I will be looking for Advanced Patterns, Harmonics, etc to help find a good entry.
Stops - 1 ATR Above last Swing High
Target #1 - Retest of Lows
Target #2 - 1.27 Fib Ext of last leg down
Crude Oil CL 1hr TCT, Fib Inversion, & CypherWell its been no surprise that CL has been in a bear trend for quite some time. We will continue to keep selling the rallies. I just missed my fill on this trade. Maybe it will come back up for me.. We will see. The TCT was based on the 78.6% fib retracement and Fib Inversion Trade which completes at the 1.618% ext. The pullback also put in a harmonic move (not shown on chart).
Entries, Stops, and Targets are all shown on chart.
The Cypher Pattern i'm not worried about right now because its a long ways away and we could re-visit previous lows and still have the Cypher Pattern Valid.
AAPL looks bearish & could break to downside of 120 Looks bearish here as it has b/o to the downside of the intermediate upward trendline from 4/14'. It also just had an outside bearish engulfing week 2 weeks ago and has been trending lower as it is testing major support lvls. Also has been in a consolidation range for almost all of 15' & can't seem to break out to new highs which this consolidation could actually be distribution. if it breaks thru the next support pivot lvl. at 120.39 which is the .23% Fib ret. lvl. from the 4/14' intermediate trend then it could be headed lower and start a new bearish trend w/ a tgt.#1=115 & then tgt.#2=111.64. Lvls. to watch also are the 200 dma at 120.21 on the daily & 119.22 which the most recent lowest pivot support lvl. As always watch volume for confirmation.
GOLD, GLDLooks bearish here as it could be forming major macro bear flag/pennant pattern and if it breaks 121-122 zone w/ volume then it could test 95-98 zone for the extension of the move & this could happen in the next few months.....it looks like the major line or zone of support is around the 90 level which would be around 900 or so actual Gold price.....this area is actually around the 50% retracement from the long-term bull rally that ended in 2011.....looks like the downtrend or bear trend could still be going w/ gold or GLD until it reaches this 90-98 zone which could be around the late 14' until it reaches this zone.....so gold may not break out to a new bull trend until the 1st part of 15'.....as always watch volume for confirmation