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ETHUSD: Price Still Vulnerable WIthin Triangle?ETHUSD update: Now that a positive catalyst has once again sparked a BTC rally (no surprise) this market has more context to rally even though it has been somewhat sluggish compared to BTC and LTC respectively. The good news is this market is coming off a major support zone with momentum that is backed by supportive structure. How do you buy if you missed the trigger? During the minor retrace lead by BTC, this market retested the 872 to 739 major support zone (.618 area of broad bullish structure). Within this area the 824 level (.382 of recent bullish structure) was also tested which lead to an outside bar. This configuration is not only a very bullish sign (the newly formed bullish trend line) but it was followed by a minor higher low that served as a long trigger within the major support zone. I did not write about this particular trigger because I was more focused on BTC and LTC opportunities, I also did not take this trade because I was not overly enthusiastic about this market's lack of responsiveness. So the big question: Is now still a good time to buy? The answer depends on your outlook and how much pain you are willing to take. 816 is the current swing low and reference point to measure risk from. And that is the lower risk swing trade perspective. If you are looking to enter for a broader move, you have to be okay with the possibility of price retesting the 739 lower boundary of the broad support zone (it can happen). This increased risk means if you are too aggressive with your size, or too nervous about pull backs, you are more likely to get shaken out if any bearish drama follows. If the momentum is bullish, shouldn't price just keep going now? Why worry? Speculating in any financial market is like playing a game of musical chairs, once the music stops, you better be close to a chair. In trading this means you must always consider your position if everything falls apart and then ask yourself if you can handle it. What can go wrong in this market? The 921 resistance is still in play and beyond that the broad bearish trend line in the 940 area also stands in the way. With bullish momentum supporting price, these resistances are more likely to break, but IF they don't, especially if price action forms a lower high, that would make this market more vulnerable to bearish catalysts or short term drama. In summary, the overall market structure at the moment is more of a consolidation than a clear trend (as defined by the converging trend lines). This broad triangle is one giant continuation pattern in my opinion, and offers plenty of bullish potential if you are able to hang on during the over reactive pull backs. A break of the lower boundary of this broad triangle is not a major bearish sign, but it could lead to the retest of lower supports especially in the face of any newly formed head and shoulders pattern. I only mention the bearish possibilities because they are important to recognize when assessing the type of risk you are willing to take. Overall I am bullish on this market, it is just a matter of waiting for a price that is in line with my criteria, especially since I am holding other positions that are correlated to this market generally. Questions and comments welcome.
BITFINEX:ETHUSD
by MarcPMarkets
8
ETHUSD: Beginning Of Consolidation Or Next Bear Move?ETHUSD update: The shallow higher low structure across the coins is lacking follow through that used to be much more common in these markets months earlier. Is this the beginning of the next bearish leg? Or is the higher low consolidating instead? It is important to understand that after the type of sell off that occurred recently, markets often don't just reverse back up in an instant. Many of the participants that were buying fearlessly months earlier are now not so fearless. New participants who are entering the market can also see how large and fast a correction can be and are cautious. This sentiment is often reflected in the news and hype outlets that these participants often react to. What typically follows a period of highs or a dramatic correction is consolidation. The market needs to prove that it is stable which in this case would mean failure to make new lows, and secondly, there needs to be a string of bullish catalysts that get the hype machine going again so that the herd reacts by buying. In this market, the key signs of strength to watch for are: A retest of the 778 higher low. This can unfold in the form of a failed low, meaning price touches the 739 lower boundary of the current support zone and holds by printing a common reversal pattern like a bullish pin bar. A break of the 921 resistance level which is related to the old support/new resistance concept and also a .382 resistance of the recent bearish swing. The break and close above this level will confirm the higher likelihood of a bullish continuation structure. An extending triangle formation over the next few days which demonstrates a lack of selling in my opinion especially if this occurs within the 872 to 739 support zone (.618 area relevant to recent bullish structure). Can't this formation also be considered a lower high which is a sign of weakness? It can be, but typically weakness does not waste time. Often selling unfolds much faster than buying in financial markets in general. (It will take a week to go up 100 points and then give it back in 2 days). So as long as price is holding rather than pushing lows, it is less likely to be a lower high, especially since this consolidation is occurring within a major support area. In summary, which direction the market chooses is up to the market. The best we can do is interpret the price action and measure where it is more likely to go, and adjust as new information becomes available. Charts and chart patterns do not move markets, they only serve as a reflection of order flow. Since history repeats itself and markets trend, it is possible to gain some insight into the immediate intentions of the herd and that is what TA helps us do. Good TA is not trading, it is a visual guide that can help us make trading decisions that are more in line with market intentions. Trading is about putting capital to work in an a way that will generate profit over some period of time. Your time horizon determines what information carries more weight when using TA. I have been bullish in these markets because long term fundamentals have not changed. It is a just a matter of waiting for the technical aspect of the market to realign on the time horizon I am trading and that is the position trade horizon. Questions and comments welcome.
BITFINEX:ETHUSD
by MarcPMarkets
10