ETHUSD: Relative Weakness Means Wait.

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.