ETHUSD: Higher Low Signals Strength But Inside Resistance Zone.

ETHUSD update: Higher low forming inside resistance zone while momentum remains bullish. On top of that, there is a bullish pin bar that may signal further buying for a potential higher high.

While BTC has a somewhat similar formation, this market happens to be inside a resistance zone while BTC is not. As I write continuously, best practices say buy supports, sell resistances, but always remember to consider context. In the current situation, there is a bit of a conflict. There is a shallow higher low forming within the 741 to 845 resistance zone (.618 of recent bearish structure). Often higher lows lead to higher highs, and in this case, since momentum is clearly bullish, it is within reason to expect this resistance to break.

With that being said, I believe this market will follow BTC which is in a slightly better position to rally which can lead this market into the next reversal zone defined by the 876 boundary. Although a shallow higher low is a very aggressive trade, we are not issuing a buy signal for this market (especially since a signal was issued on BTC. See S.C.).

The more attractive location for a swing trade long is the 656 support (.382 of current bullish structure). Price may not retrace back to that level though, especially if BTC pushes its resistance zone. This is a tough call because as all the coins are poised to go higher, this particular market is less attractive because of the risk associated with such a location.

Best practices offer a general guide to positioning yourself alongside the intent of the market. Buying a strong market, one that makes higher lows and higher highs is appropriate, but context is an important consideration when it comes to assessing the risk. And when I mention risk, I am not just talking about the possible loss, but also the probability of the trade following through which is a different and tough to evaluate variable. If we are going to call an aggressive trade, we would rather choose BTC since it is in a more attractive position compared to this market. Remember, the purpose of these posts is to provide insight and perspective, because when it comes to taking risk, you have to be able to do that within the boundaries of your own tolerance and trading process. You must be able to make your own independent decisions, and know exactly why you make them and recognize when the market is not cooperating quickly. Check out S.C. for more.