This post will detail how I initially set up my SWING trade strategies for a medium term play and what levels I look at for flipping ETH. First, lets notate what's going on in the charts: Day Chart. 1. MACD crossed up, but is starting to fade and has not gone into positive territory 2. RSI is in the middle. 4 Hour chart: 1. MACD crossing down 2. RSI showing divergence. 3. Trend line resistance. I Adjusted the trend line and we are hitting, I did have this higher, but there is significant resistance at this 500-550 area so it's not a surprise we are moving down. Buying Scenario if we move down: I have about a 25% profit on my portfolio this year, while crypto's have moved down more than 50% for the year. We are doing well to say the least and we made out nicely on our last Swing trade, and I want to set up another overall plan going forward and this is what I am looking at. It's hard to say in this vicious bear market if we are out of it yet or whether we get another substantial move up from our first support zone of the 430-450 area. If the market is reversing, it will either happen there or at or buy zone #2 within this channel and double bottom. Once my first orders get filled I will be trailing my stops up as the market moves to lock in profit. We'll watch it close at that time to determine whether we should load up more or let our Martingale Strategies take hold if it moves down. If you don't know what the martingale strategy is, make sure you read up on it! I will stagger my buys something like this: Buy zone 1: 10% Buy zone 2: 10% Buy Zone 3: 20% Buy zone 4: 30% Buy Zone 5: 30%
My first buy I am looking to get in at this 430-450 area depending on what it does. Remember, having an over arching plan in place before we start trading allows us flexibility. Before bitcoin dropped all the way down to $6,400, we were able to flip it twice. More importantly this strategy gives us OPTIONS. We are able to pivot and adjust as the market does, go in heavier if need be, etc.. If the market starts dropping like a rock, we have a solid plan in place to play it. Just as we did last time. Going in from 600 down to this 375 level and out with profit.
Buying Scenario if we move up. We need to test these resistance zones at 575 or the 600-625 in order for us to be buyers on pull backs. Once those levels are hit, I would be looking to buy in this 500-525 zone for a continuation move.
Until we move either up or down from here, we are in a no trade zone.
Happy Trading. Don't stress, don't use leverage and pick your points! -Sherem
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I don't agree with your strategy. It is obvious to most people that ETH has broken out. I don't know why you want to buy ETH when it is falling into most of these Buy Zones. If it hits zone#2,3,4,5 I'd be long gone from ETH. I prefer to buy cryptos that are going up, not those that have lost momentum and are falling. Your Buy ZOnes makes sense to me if ETH is trading in a range, but as more people realize ETH has broken out, they will push the price higher. I doubt you'll ever see the prices for zone 2,3,4,5 again this year. Just my 2 ethers.
Sherem
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@BDG, i adjusted all of them on my new post and I would give that a look. Going in heavier on my first zone at $520 for a pullback. I trade with a martingale because of the large volume size I trade with which in turn makes me a more cautious trader. ETH has broken out, but what if it's a false breakout? We just don't know and my trading style is to trade with an unknown variable always there. I have been trading a long time and over the years I have learned this is the best approach for me because I hate stressing, but everyone has different trading styles that work the best for them.
My buy zones are what's important, I try and identify points of inflection and you can structure your plan however you want.
BDG
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@Sherem, Peter Lynch, perhaps the greatest fund manager of all time. between 1977 and 1990, made an average annualized return of 29% which is quite incredible. Why was he so successful? It may be because he went after 10 baggers and 20 baggers and occasionally he would land a 50 bagger. He said something quite profound in one of his books that I will never forget. I'm paraphrasing here, but he said "To profit from a 10 bagger, you have to realize it will continue to make new highs."
Many traders when they see a stock or crypto making a new high (or a recent high), they ignore the trend and instead they wait for a pullback. They convince themselves it will pull back so they wait by the side of the road for the parade to come around again. They always have to buy on the cheap to convince themselves of their expertise in timing. Certainly there are entry points to getting into 10 baggers, but they seldom give back more than a few percent at a time or they will breathe for a spell while they catch their breath for another run up.
For me, if a stock or crypto that had a strong bullish trend suddenly dropped 20%, I wouldn't buy it, I would sell it. It would likely trigger a stop and I would wait to see if a bear trend had developed or if the bull trend will continue. I wouldn't buy a stock or crypto just because it dropped 20%. If I did, I would be buying ETH all the way down from the top of $1400 down to $360. I saw Jim Cramer do that on live TV in 2008 at the start of the crash when someone called in and wanted to know if Bear Stearns was a good buy at $80. He said sure, look it came down from $120 so its price is now really discounted and is a definite buy. He rang is buzzers to confirm it was a buy. I wonder how that caller felt when in a few days Bear Sterns stock was selling for $2.
I would much rather determine the direction of the trend and embrace it. When the trend breaks down I would sit by the side of the road and wait for the direction to be determined by TA AND confirmed by price before getting back in. I don't have the bravado to catch a crypto that has fallen 20% and expect it to bounce back up. I've seen it keep falling far too many times to get suckered again. That's just how I see it. I hope this has been of use to someone.
ayildirim
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Hi thanks for sharing. Did you consider the "hidden bullish divergence" probability?
Sherem
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@ayildirim, Yes, at this point we are in a no trade zone IMO. This strategy I laid out is the framework of how I will trade whether it goes up or down. I lay out what I would look for if it moves up, or down. If it does move up, I will rebuy at with a similar structure and possibly more depending on how it looks at the time, but this gives me a good starting point with the amount of RISK I am willing to take. It's not so much about how much you make, it's about how much you don't lose.
atorrealba
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The martingale trade zones are pretty on point with some targets, buy zone #4 would need a market crash/BTC head to 4k but for now ETH is in distribution
atorrealba
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@atorrealba, Buy Zone 5 is extremely overextended and ETH/BTC would also need to continue a sell off which is unlikely. Anything under $400 is a buy for me
Sherem
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@atorrealba, Of course it is, people also thought 400 was overextended and there we were. A proper Martingale looks at the worst case scenario and then goes one step further, IMO. If anyone could call the bottom, what would be the point of laddering in positions? I can always go heavy at any one of the areas if it's throwing off more reversal signals, by doing it this way I have a lot of options and I don't have to stress when trading.