ETHUSD Update: Minor double top within projected resistance zone of 301 to 307 area while BTC hardly pulls back, but is still stuck within a much more significant resistance zone also.
Like I wrote about before, the selling structure has establishing itself, but there is no real catalyst to get these markets moving. Many people are asking why, or trying to find some kind of news or information to help explain this price action.
This double top formation will be confirmed once the recent low at 280 is taken out. There is also a minor support zone at the 286 to 291 (.618 of most recent bullish swing) is worth mentioning since small time frame reversal patterns can offer day trade opportunities in an area like this, but that is up to you and your trading plan. Based on the current structure, these supports are more likely to break rather than show reversals and are not worth the risk for any swing trades.
Price may hesitate at the current supports in the 286 area, 280 and even in the 260s, but the reason why I will not consider any reversal patterns for a swing trade is because in this context of a lower high, these levels are more likely to break.
I know that many participants, especially if they are in positions, scour the internet for any piece of information that can explain the current price action while price is telling us everything we need to know. When the balance of order flow is made up of sell orders (and that includes the hidden ones on the exchanges), over time, this activity will express itself in patterns. Patterns like the double top, or failed high.
Often these patterns will appear, days or weeks before some big news surprises the markets and that is when most people notice the obvious selling and think it started with the news event. The signs are present now, like I have been writing about, the only thing that is missing is the spark which can come out out of nowhere.
Besides this short term price action, I have been writing about the wave counts in both BTC and ETH markets, which appear to be at a bearish turning point also. The only thing that is holding these markets up is the persistent BTC strength, but this strength is no where near the same compared to how it was behaving the first time up to 5k.
In summary, the situation has not changed much except for an appearance of more bearish price action. The double top and lower high formation warn of oncoming support breaks, especially if there is something motivating the order flow. Like have written before, I am not taking any swing trade positions in this environment because the risk is too high compared to the potential reward based on my swing trade plan. It is just a matter of waiting, and waiting does not require any risk. Like they say flat is a position.
@MarcPMarkets totally hear you. And I agree, price action contains everything needed. Only problem is having enough skill and experience to decipher it. Which I don’t think I have. So I employ additional tools to help provide greater clarity.
Case in point: Goldman Sachs recently announced that they’re looking to get into Bitcoin trading. Now anything coming from the major banks must be taken with a grain of salt. How do I read this? That Goldman have *already* entered into the market, not that they're "thinking about it." They are PR’ing that they are interested in Bitcoin in order to pump the price. Naturally, this will pump the price, as a lot of people take this sort of news at face value. Then when the price has pumped, they will dump, making a nice little profit.
So if I can use the news (not on the face of it, but in a contrarian way, it’s all mirrors and shadows), then I can get some insight into what might be really happening, and use that information to help further inform my TA (i.e., bull vs. bear?).
Thanks for the great analysis!
mashtrader
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@dalmazio, great point of how major brokers enter a position and then push it up by announcing it but I don't see any price reaction , as a matter of fact bearish signs are still there . Do you thing they're pumping to short ? and drive price down then start loading up ?
dalmazio
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@mashtrader, yes I do. Manufactured volatility. A lot of money can be made and lost in volatile markets, especially if one has deep enough pockets to help create the volatility in the first place. On top of that, every dollar in cryptocurrency is another dollar in value that JPMorgan & co. cannot monetize. So by making Bitcoin et al. unnattractive for regular people through crazy volatility, *and* making money in the process, it's a win-win (for the big banks).
It's like Jamie Dimon, Mr. JPMorgan announcing that Bitcoin was a fraud. Talk about the pot calling the kettle black! Price drops, as many less tech savvy people pull away thinking he must know what he's talking about, and then JPMorgan (in all likelihood) gets onboard, like Goldman Sachs et al. Then sometime later comes another "announcement," from some other part of the organization (or another banking institution) that they are partnering with or sponsoring various Bitcoin/blockchain events, or they are looking to experiment with trading Bitcoin, etc. etc. all to pump the price. At times it seems like a kind of Jekyll & Hyde split personality disorder. Then comes the dump. Rince & repeat. I trust these guys about as far as I can throw them. They're all about manipulating markets, extracting everyone ounce of profit, at any cost (except to them).
Well, what you say may have already happened with the steady increase in price over the last week on very little volume. Latest announcement of Goldman Sachs possibly interested in experimenting with Bitcoin trading (thanks @goldbug1) maybe is an attempt to squeeze just a little more upward price movement, before things come tumbling. Maybe they succeed, and we have a bit more upward price movement. Or we're already too overbought and we tumble. We shall see.
MarcPMarkets
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@dalmazio, hehe very nice perspective thank you for sharing. We are certainly on the same page.
MarcPMarkets
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@dalmazio, you are using the news exactly how it is supposed to be used: from a contrarian perspective. The less experienced take it at face value. The next time I get criticized about being contrarian and anti news, I am going to cut and paste what you just wrote. Very nice to see. Thank you for sharing.
Thank @MarcPMarkets! Appreciate for running me through your thinking process, definitely very valuable lessons in itself. Could this possibly be a cup and handle formation? I guess if I develop a plan, if it breaks above the "handle", it could be a potential entry for a swing/long. Will wait for the market to validate.
MarcPMarkets
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@jasonlau924, anything can happen. I am looking at the waves and the levels, if they change to bullish, then I will change too and find some swing trade opportunities.
Case in point: Goldman Sachs recently announced that they’re looking to get into Bitcoin trading. Now anything coming from the major banks must be taken with a grain of salt. How do I read this? That Goldman have *already* entered into the market, not that they're "thinking about it." They are PR’ing that they are interested in Bitcoin in order to pump the price. Naturally, this will pump the price, as a lot of people take this sort of news at face value. Then when the price has pumped, they will dump, making a nice little profit.
So if I can use the news (not on the face of it, but in a contrarian way, it’s all mirrors and shadows), then I can get some insight into what might be really happening, and use that information to help further inform my TA (i.e., bull vs. bear?).
Thanks for the great analysis!