MarcPMarkets

ETHUSD: Relative Weakness Means Wait.

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
ETHUSD update: Since the close below 300, this market has proven to be one of the weaker alts. In typical fashion price is now finding resistance upon retesting the 300 psychological level. Any further recovery will likely be lead by BTC which is in a stronger position.

At S.C., we shared a swing trade idea to go long BTC with members because we believe that is where the greatest potential is. A common mistake is to buy the most beat up candidates under the logic that they have more room to recover.

This is flawed logic because usually, the super low prices are that low for a reason. I published an article (on S.C.) about Litecoin demonstrating how low too low is. There comes a point where it is no longer worth betting on until it can meet specific technical criteria again.

This market has also reached that point by our standards. Keep in mind, this does NOT mean we are bearish , or have sold our inventory. All it means is we stop accumulating or looking for short term trades because there are other candidates that offer more favorable probabilities.

For example, Bitcoin failed to push the 5750 low while this market and most of the alts blew through their key supports. Bitcoin is showing relative strength and if this space recovers, in theory it should rise the fastest and furthest. Why? It's structure says that it is stronger.

This concept of a "too low" filter is a form of protection. ETH has been one of the weakest of the alts. Why continue to allocate capital toward something that has a greater chance of probing even lower, or not recovering to the same degree as other markets that are in a stronger position?

In summary, we are not giving up on ETH. We are just no longer adding to inventory until it proves its technical worth. This is a situation where it is better to sacrifice better prices for better chances of a favorable outcome.

When managing a portfolio like the one we have, our main priority is to allocate scarce capital into the markets with greatest potential. And that determination is made using market generated information and techniques to interpret it. Not feelings or opinions.

Like I wrote in my Bitcoin article earlier, trading probabilities is what facilitates alignment with market intent. When this market shows an improvement in structure and presents a more favorable context, we will have no problem with building inventory further and participating in shorter time frame movements.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| http://www.Priceactiontraders.net | Cofounder http://www.seekingcryptos.com (S.C.)





“A common mistake is to buy the most beat up candidates under the logic that they have more room to recover. This is flawed logic because usually, the super low prices are that low for a reason.”

What a brilliant piece of advice. It took my years to learn this.. Thank you for sharing.
+1 Reply
@serhan, can you explain this more?
whats ur prediction for eth?
Reply
serhan last.samurai
@last.samurai, Well, there is a saying "don't add up to losing trades" or "cut your losses fast" They're all related to this idea. If the price is decreasing than there are more selling pressure compared to buyers. As the price goes even further down, it invites more people to sell which increases futher the selling momentum. That's why you shouldn't be tempted to buy dying coins, you're just too weak for all those bears. For the case of ETH, it broke down a very important trend which is going back as far as April 2017. This event created a panic in the ETH market and started people questioning the future of ethereum. I'm more inclined to add ETC instead. However, it's a risky ball to play with, volatility is very high and hard to predict the outcomes. Good luck.
Reply
Thank you Marc for another good piece of analysis. We expect a maximum Lower High on the Channel Down around 357 and then bearish continuation:

+1 Reply
last.samurai InvestingScope
@InvestingScope, do u think its really possible to see eth under 200$ again?
Reply
Ethereum has great fundamentals and largest development team and corporations working with Ethereum ecosystem . Even though structure is not exciting at the moment but as a very long term investment i think it's a great place to start investing in Ethereum who didn't invest last year or missed the ride.
+1 Reply
raghavgrover013 raghavgrover013
@raghavgrover013, PS : Just look at Lubin's recent interview with Bloomberg.
Reply
Muchas gracias por tu análisis lo tendré en cuenta para tradear eth, un saludo!
+1 Reply
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