Even though these markets have been very recently, they do not decline in a straight line. Retraces happen, and when they offer greater potential reward than the cost in terms of risk, a trade can be justified.
This is the situation with this market. In terms of structure, price is in the process of establishing a failed low formation. This is happening while bouncing off the reversal zone boundary of 458. A level that has been in place since May.
On top of that, this retrace is occurring within the 544 to 464 which is the .618 of the recent structure. The trigger developed in the form of a off the 458 level. When it becomes hard to argue with the signs, it is time to trade.
The rest of the trade details like the stop and target are available on S.C. I chose a conservative target because structure is still in place. The and the 625 (.382 of current structure) have not been taken out. Until they are, it makes more sense to expect less from the long side.
In summary, we have been writing adamantly about accumulating coins during this time of unjustified negativity. As Andrew wrote in an earlier article on BTC , if you believe in the merit of these technologies for the long run, meaning over years, then there is no reason not to buy extreme weakness.
If this retrace turns out to be strong, that is when everyone who is hesitant to buy now will feel comfortable jumping in. And guess what we will be doing? Locking in profits.
It may feel counter intuitive, to buy markets that have been so weak, but the comfort zone is not your friend. Especially in financial markets. Remember, it's about probability, not profitability. And if the trade stops out, it will still be considered a correct trade since it was within the criteria of our swing trade plan.
1) "Unjustified negativity" - the SEC has recently said that most ICOs are securities of a kind. This marks the beginning of a drawn out process that will include court cases, convictions for fraud, etc. While I agree that Ethereum has interesting potential applications these are experimental at this stage and it makes sense to attribute a significant part of last year's meteoric rise to the explosion of mindless optimism around ICOs, the majority of which are right now being confirmed as illegal activities.
2) Sometimes you set your analysis of altcoins into the context of Bitcoin - other markets follow Bitcoin - but not this one. Well, the Bitcoin market looks decidedly weak or at least very uncertain, with no quick resolution coming to save the bulls. Won't ETH be infected by this uncertainty / weakness?
The events that took place earlier today to liquidate shorter, were planned and instigated by a small number of large traders. John McAfee even had the audacity to hint at it the day prior and it people in forums were told to close their shorts (knowing the clearly would not). Had I not been trading at the exact moment I would have lost much more and many lost everything. This is unacceptable. The crypto market has become a predatory stomping ground for those who became uber rich from the epic rise and will go to any length to extend the bubble.