Chart update. Position: Very Bearish with a chance of bounces
Technicals. Day and Weekly Chart. 1. RSI is in negative territory 2. MACD looking vicious to the downside. 3. Breaking lows.
It's clear we are in a bear market. No question at this point. We want to look for signs of a reversal, but there are none and we will continue looking. With all of that down pressure, What's a trader to do? Profit, of course! There are a lot of ways you can do it, the methodology I will be going over in this post is the Martingale Strategy and how to play the bounces as we move up. The reason I like this is because I am not perfect and I can't watch the markets 24/7. Everyone has things they need to do during the day and you also need sleep. The martingale technique involves looking at what you think the highest probability move is for a bounce and then entering in accordingly and playing the bounces. more importantly if you are wrong, you have points in place and plenty of room to be wrong. You have options, which is important. Lets see what BTC -4.29% is telling us here.
We know we are moving down. But how far down can we go? At this it's hitting it's double bottom at this 600 area. It would seem that a bounce is in the cards, but it's hard to say. what if it blows through that support point, and completes the ABCD pattern I have outlined, what do you do? For me, I implement a martingale strategy and I would do something like this:
ETH BUY @ 600 area: 10% of portfolio -This trade is active ETH BUY @ 500 area: 20% of portfolio ETH BUY @ 400 area: 40% of portfolio
Where's the other 30% you ask? Well, what if it blows through this 400 area and shoves to 250-300 area? This is a low possibility (IMO) and while a bounce would be very warranted before a push to the 300 area, personally, I like having a backup plan and options. If ETH looks like its going to bottom at 400 I can always enter in or sit on the sidelines. The key is having options. There is a lot of ways you can weight your martingale positions depending on where you think the bounces will happen. Right now I have an entry in at $620. Do I care that I am losing like I normally would be if I went all in? Hardly. In fact, I want it to go down to fill my large orders. If all my orders get filled down to 420, i will have an average buy price of 472 to play the upside, and some reserves. If it moves to the upside, great! i get to profit there before it resumes down. Right now i am targetting this 680 area for a bounce
Lot of ways you can play it, I outlined some of the possibilities I am looking at. Key is to not stress about your trades. Make sure you read up on martingale strategies. You might not make as much using the martingale, but you will lose less if done correctly. Part of trading is controlling your emotions and this strategy allows you to do that. ESPECIALLY in bear markets!
Happy Trading, -Sherem
calling the top -
Calling the H&S -
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Per my post, I entered at 620. This is right at this zone right now and has some room to move up still to the 680 area. What looks like will happen is we will have a rebound in ETH/BTC which will drive this up to the 680 level and keep BTC suppressed at this 8.5k-9k area. We'll see what happens as we approach the weekend here.
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i am using this 578 low as another point to enter one of my laddered buys. Specifically, I am entering in with the same amount I did at 620 so my average price is now 597. I will be looking to get out on any rebound to 600 that would lead to break even in anticipation that another move down will occur after. I still have the majority of my portfolio laddered down at 520 and heavily weighted down above 400.
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Large seller right now pushing everything down. I went in at 575 and currently, my buys are laddered about like this: 620: 10% 575: 10% 520: 15% - this one could be getting filled here shortly, we'll see 420: 40%
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My average entry price is $533, got some great fills as it moved down. I got a fill at 475 and it almost hit our 420 mark. It's really trying to bust this $560 high, if that happens we should get some further movement to the upside.
Great post! bought at 598.45 and sold at 608.10, then bought again at 601.34 and sold at 607.56. Now have a buy stop order at 633 with a stop loss at 615.50 and a take profit at 680. You've got a new follower!
I think you're pretty on point here. However, seems like over the last hour or two the sell pressure has been holding it from climbing beyond the $620 mark. At what point do you call that the resistance at $620 is too great and move out of your $620 position in expectation of the sell pressure forcing the price down further? That downward force still seems unrelenting for the moment. (New guy learning)
Sherem
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@wcaton, Thanks. For me, it doesn't matter if it pushes down or not at this juncture. I am in a small position and looking to make scalps and quick profits on moves up where I think support will reside. If it does push down further I have buys set below to scoop up the lower prices per my post above. I trade this way because we don't know is if a large whale dumps and drives the price lower suddenly. I don't need to cross the bridge of getting out of trade until it absolutely fills all my martingale orders. I trade more conservatively then most because I martingale most all of my trades in.
wcaton
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@Sherem, Makes sense. Thanks for the reply, and the chart/updates.
StaniecLukasz
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If BTC is going to be testing 6000's, I want to believe that it the market will drag ETH down to the 400's, so your targets are very very reasonable.
Sherem
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@StaniecLukasz, That was part of my analysis and I think 400 will get hit in conjunction with BTC hitting 6k and make for a great bounce. But we will see!
To answer your question about harmonics, I don't think harmonics have been very useful up until the last few months when the markets started turning down, so I didn't really use them until recently. i have used them for a long time in forex and I am familiar with them. I don't like the symmetry per se on this one, but it's there and corresponds with other indicators so I give it some weight.
StaniecLukasz
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@Sherem, well thought out, agreed, we'll see what happens.
I was wondering as I've not seen anyone use harmonic patterns yet. However I did see 2 on Elliot wave both of which were very interesting, 1 recently that had a target in the low 500's and was skeptical about it, that person is probably rethinking of how good of a call it is now lol
One can make the argument that the market is not yet mature so symmetry can be off, for instance a lot of questionable head and shoulder patterns, both regular and inverted. So this could actually be legit, we'll see what happens, very very interested to see how this pans out.
Albeit not seeing harmonics early on, it does make sense as the entire ride up has been 1 triangle after another on the 4 hr bars, from observation, I kept thinking is this a bull trap, nope ok, next one, is this one the bulll trap, nope ok.... even as overbought as it was money kept piling in.
StaniecLukasz
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Interesting analysis, in my humble opinion we keep going down till ETH can break the long term descending line, not sure if then you can call that fair value, not sure how you would even come up with that number...
How long have you been trading in the harmonic style with cryptos? Has it been effective for you ?