ETHUSD: Extreme Lows. Chance Of Reversal High?

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
ETHUSD update: New lows made at 452 as this market gets punished by the possibilities of securities regulation by the SEC. There is only one level left where there is a chance of a bullish reversal, but until some significant bullish structure materializes, I would stay away from this market as far as initiating new positions both long or short.
The SEC interference creates a ton of uncertainty, and markets do not like uncertainty at all which can lead to extreme fear. That is what we are seeing at the moment. The fact that price did not reverse within the 713 to 520 support zone is not a good sign, but does not mean this market is going to zero.

469 is the reversal zone boundary relevant to the 565 low. The current candle is touching that level as I write this. The fact that price is in this location makes it high risk in both directions. Buying right now is extremely aggressive because there are no signs of buyers, and shorting here is extremely risky because chances of reversal are high. Situations like this are the reason why I do not get too big too fast when it comes to building inventory for a broader market move. Only fractional sizing and the willingness to lose will prevent you from being shaken out. When I say the willingness to lose, it means you are sized to the point where if this market really falls apart, it will not wipe you out. That is the risk you take when position trading.

As far as shorts go, IF you had the ability and courage to short this market, and managed to hold it, now would be a good time to consider taking profits or at least tightening protective stops. Again I do not short these markets because I do not trade them on margin, but if I was short, that is what I would be thinking at the moment.

In summary, as long as momentum is bearish , I would avoid any new longs. If you are feeling aggressive, you can wait for some sign of reversal off of this particular area and initiate a small position, but do not expect stability or follow through until there is an appearance of a clear reversal structure (higher low) and/or break of the bearish trend line . The best thing you can do during a situation like this is plan ahead, and NOT react to what is happening now. Reacting is what leads to selling bottoms and buying tops. This situation is no different than buying at 1350. If the whole regulatory situation turns out to be less threatening than expected, this market is going to squeeze hard, and you do not want to be caught on the wrong side of that. Can this market go lower? Sure, anything can happen, but remember when a market looks its worst, often that is a better time to consider buying.

Comments and questions welcome.

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+3 Reply
Hey Marc,
To get it right about shortening.
I’m still green on most of my trades, I’m in for long term. Are you saying it’s wise to put in sell orders (protective stops); around my buying prices?
For me it means about another 50% off the current price.
I’m not worried. Just trying to understand the bigger picture.
I could sell now and take my profits but yah the change for a reversal is possible.
+2 Reply
BitPersia airwolfke
@airwolfke, I have the same situation except I need some of my money and I am looking for a an exit to cash out some ... @MarcPMarkets do you think that we will go up to 8.5k or higher again? I would be surprised if we don't but in case the sell off continues where should I put my stoploss and when to buy back to avoid FOMO? I think BTC can easily go as low as 4k in next few months if the scenario you talked about plays out ... but it can also go up at least to 10k one more time ...
befunkt airwolfke
@airwolfke, Are you in a short position, or did you buy long? Sorry if I'm explaining too low, but it sounds like you bought ETH at about $300, right? This would not be a short trade (bet against the market trade) so what MarcP said about taking profits would not apply to you.
airwolfke befunkt
@befunkt, yes your right. Yesterday sold on the dip it seems. Well I still need to learn a lot, a least I haven’t lost money but also not gained any while I could have.
Lessons lessons lessons!
jamesaphoenix airwolfke
@airwolfke, I don't trade with stops. I do the same as MarkP and Goldbug, they use fractional sizing on their entries to mitigate risk. It'll reduce the amount that you get shaken out of the market. But it also comes with the risk that if the market takes a downturn you'll need some cash to supplement and buy at future good reversal points.

RSI, Chart patterns and Candlesticks is what I'm using atm.

Still a rookie but enjoying the journey :)
Any updates on ETH Marc ... slow edging in here with risk capital. Either way, it moves I am here for the long game so liking these levels a lot. Happy trading guys and gals.
Are you always seeking for answers @MarcPMarkets ? Worry no more! I've got your back, again.

Posted this buy in on Feb 1... We touched it twice. It was some good money to be made and still is. I think we bottomed out.

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dwk8081 Lou100B
@Lou100B, agreed ... I am liking ETH here but think we will have a stab at those levels soon.
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