ETHUSD: Price is in a consolidation. Within the context of a broader bullish trend, these are usually continuation patterns. I am still bullish and prefer to buy at supports and hold for a broader target.
At the moment this market is showing signs of minor bearish momentum confirmed by the lower highs made at a key resistance area of 273 (This level has been in play as a major support previously). A reasonable retracement is a move into the 258 to 250 area. It is wide, but there are plenty of minor supports to reverse from. If price falls below 250, the next major support area is in the mid to low 240s. I would look for stabilization there before taking any action. The key level that will negate the bullish scenario is a break below the 229 support. Trading back into the low 220s is a serious sign of weakness and for me, a good reason to stay out and reevaluate.
If a reversal pattern appears and validates within the 250 to 258 area, I am looking for longs. My risk will be measured from the 250 low. My conservative target is 278 (T1) and more aggressive target is 292 (T2) and my over the top target is 309 (T3) because this market will really need to have a lot of enthusiasm behind it to see that price again. It's possible, but not likely in the next couple of days in this low activity environment.
Alot of Moon kids are upset because they bought at the top and now have to sell the dip, Good chart overall.
I shorted and I'm profiting off their stupidity
MarcPMarkets
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@Ravness, nice job! Yeah it appears there are many involved who are completely ignorant of the basics of technical analysis and speculation, but hey that's what makes a great market great! Without them, you would have no one to sell it to! Hehe.
qedbeech
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Hi, I am having difficulty identifying reversal trends. I've been watching the order flow to help me decide. For example, when it started to hit the 250 level, the sell orders were getting created whole lot and no buy orders and it just kept on continuing.
Are there other indicators that could help me decide when it's time for a reversal? Support levels + HH + HL are helpful but was wondering if there's another dimension.
Additionally, how could one know that the price has "stabilized" - What is the time frame needed to say it's been stabilized?
@hirounsung, I was thinking shorter term reversals.
MarcPMarkets
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@qedbeech, orderflow will be very confusing for sure with all the noise. It's like you are looking at the market through a microscope, when instead you should be using a telescope. First you must know what time frame you are looking to trade. Is it a scalp? day trade? swing trade? even longer time horizon? Then you focus on the support and resistance that is relevant to that time frame. In the case of ETHUSD, the 250 and 240 areas are relevant to daily and weekly time frames. Once price is within those areas, I WAIT for a structural reversal or series of reversal patterns but they may never appear (I GO with the flow and consider many possibilities that I WOULD LIKE TO SEE in order to take action. If the market does not agree, then I do nothing. Trading plan 101.) An example is IF the market presents a double bottom on a daily time frame, that type of reversal can take a week to form maybe longer, but if it appears, that is my reversal. The market may instead show a higher low, or a variation on the double bottom or it may fall through and cancel my idea all together. It is the amount of TIME that let's me know if price is "stabilizing" because as long as it stays above the major supports, and the long term trend is intact, there is a better chance in my opinion that buyers will return. So if a week goes by, and price is failing to make new lows, that tells me something, but again, I must consider levels ans ask questions like: Has it broken a minor resistance yet? If it's strong it should, if it hasn't then it's still weak. I'm trying to keep this explanation simple so that you can understand the idea. There is a lot more thought and evaluation that goes into a buy or sell decision, but it starts with the signal on the chart. Price structure is the best information you can work with, but you must have other parts of your trading plan well defined for it to make sense.
qedbeech
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@MarcPMarkets, thank you for the response.It makes sense to look for reversal patterns over longer periods of time. I was trying to come up with a system for looking for shorter time frame reversals (intraday) but was having difficulty.
MarcPMarkets
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@qedbeech, you can accomplish the same goal on short time frames using the same idea, the key is identifying the relevant levels first. Then you can wait for the same patterns, and even use candlestick patterns to validate further. For example you can observe on an hourly chart, which can take a number of hours to present itself. Remember its more than just recognizing a reversal, it's also about confirmation AND measuring risk so that you are less emotional if the trade does not work out. You also have to keep in mind that shorter time frames contain a lot more noise, so you really need to be in tune with how they are aligning with the larger time frame.
qedbeech
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@MarcPMarkets, Great advice. I am trying to develop a disciplined approach as well and making trades based on a system. I used to trade in much shorter time frames with some success but am looking to move away from it and use longer time frames.
gazza_herh
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This is a **hole of a currency to trade , Thanx for taking time to do an analysis but this beast has taken way to much of my money , I am in interested in this currency until it goes over 320 :) Thats my feeling
I shorted and I'm profiting off their stupidity