ETHUSD Update: 230 support area has been reached while all the coin markets sell off. This is actually a great time to start considering accumulating small positions for the long term even while there are no signs of buyers.
Momentum is bearish and price has been making lower lows along with the rest of the markets. BTC is clearly leading the way. You can blame it on the news, or whatever other catalyst you like, the important thing is that price is beginning to revisit attractive levels. This is where the people who were way too bullish at 380 get pushed out of there positions, especially the ones who used leverage and have no idea how that works. A few weeks ago it was hard to imagine this market testing the 230s, but as you can see, anything is possible and why I always focus on risk and not reward.
The 230 support zone is relative to the .618 of the recent bullish swing and is a wide area with the bottom boundary at 196. At the moment, since there is no sign of stability in any of these markets, it is possible to test that level. And if you zoom out further and look at the entire price history on a weekly chart, you will see that the .618 relative to the overall initial wave is the 162 to 94 area. I am not "predicting" that this is the next support, but it does provide some perspective in the sense that there is room for this market to test lower prices and it would still be normal.
The fact that this market broke the 296 level and has not found stability, followed by retesting the current support, signals that this market is more likely to see more of a range bound environment in the near term. This means short term positions should have conservative profit targets, like the low 300s, etc. This market no longer has the structure in place to see 400+ in the near term. The market now needs time to stabilize and consolidate.
When markets are full of fear, as long as they maintain their fundamental value (in this case the technology hasn't changed), the opportunity to start accumulating a small position is not unreasonable. This is not a technical play, or a short term trade. It is buy some for the long term. Months and years not days and weeks. Even though there is no technical bottom in place, and there is still room to go lower, as long as you believe in their future, then this situation as a whole is a buying opportunity. The key is starting small. For example if you buy 1 coin at 230, and it goes to 130 in the next week, is that really going to hurt you? Also you have to keep the this process and strategy separate from your shorter term plays. It is more of an investment. Remember, the goal is to build onto the position as the market stabilizes. By starting small, you are limiting your risk and will have the ability to take pain. If you start big, or get too big too fast, or use leverage, you will get yourself into trouble quickly.
In order for this market to show any sign of stability, the first thing that I need to see is a break above the 293 level. This is the .382 of the entire bearish swing and an overlap of the .618 of the most recent bearish swing. IF price pushes above that level, that would be the first step to looking for more signs, like a higher low. I must emphasize this level is not a buy trigger. Just a point of reference that will signal the bearish momentum is losing steam. Until that happens, any minor retrace is more likely to unfold as a lower high.
In summary, do not get sucked into the hype. As long as these coins maintain their purpose, and they are not rendered obsolete by some new technology, you have to see beyond all the drama and think against the crowd, ESPECIALLY this crowd. I am staying out in terms of swing trades until these markets can stabilize and when they do, price action will provide the right clues. And now is the time to think about a core position, not at 350. You will not get the bottom. Remember: small.
Thank you for posting an analysis or market recap every day @MarcPMarkets ! I learn a lot from your ideas.
MarcPMarkets
⋅
@JeppeP, you're welcome. I am glad you can appreciate the educational value.
f1dust
⋅
Great insight Marc! Great to see someone with a solid foundation and strong trading psychology giving us great commentary.
This helps a lot especially for newbie traders like me to refine and reinforce my trading strategy.
I may not comment or post a lot but know that there are people reading and learning from your insights everyday :)
Thank you!
Abu_Batata
⋅
You called that 196 bottom extremely precisely. Very nice work.
Gamemaker73
⋅
thank for your educational value, I appreciate this attribute.
cryptofan07
⋅
Marc Im glad to read your post its chilling my head. All these news may bring btc to unexpected low prices
gciriaco
⋅
Double Bottom at 30 Minutes chart. Gracias hermano mio @MarcPMarkets
cryptomanna
⋅
@gciriaco, Increased volume on the second bottom is typically needed to showcase a strong trend reversal which is not present here. More than likely this is a slight rebound before heading lower.
gciriaco
⋅
@cryptomanna, I guess. i did little profit there 10 bucks per eth...
xuanrong90
⋅
Thank you Marc for the insightful post. I'm long term bullish and started buying small amounts too.