ETHUSD: Nice Try, Long Way To Go.

Ethereum update: The retrace attempt may look impressive at first glance, but the broader structure provides a more sober perspective. A move from the 160 area to 224 is nothing to sneeze at, but how much did you have to lose in the process of betting on this random event?

This is one of those situations where good is not good enough. Although the move to 224 has the impulsive traders hungry for more, both broader bearish trend lines are no where near being compromised. Like I have been writing in recent Bitcoin articles, the initial move is the most costly.

At S.C., in order for us to come off the side lines, this market needs to close above 300 at minimum. Otherwise it will have to take the time to build a much more convincing structure.

The initial move is the most costly because in order to prove itself, price needs to test a support to demonstrate the possibility of further strength. Buying too early means you are not only exposing yourself to this adverse movement, but also to the possibility of momentum continuation. Which in this case means a lower low.

In summary, market reversals are not a single event, they are a process. Now that the initial move is in place, our objective is to wait for the market to prove a broader reversal is likely. It can demonstrate that in a variety of ways with the most recognizable way being a double bottom formation.

Getting sucked into the initial move motivated by the fear of missing out is a common mistake, even if it pays a random profit. If this market probes higher, the broader structure is still not favorable for the type of swing trades we aim to take.

If this market is going to recover, it will take time to construct the evidence. Waiting for this requires patience in the face of movement that looks promising, but offers no distinct advantage. We would rather sacrifice what appears to be better prices, for conditions that are generally more favorable. This perspective specifically pertains to our swing trade methodology, and not our inventory management. We do not mix strategies.

That is how we effectively minimize losses and maintain positive longer term performance. In this game, you have the opportunity to only play when the conditions are best for you. Take advantage of it.

Comment:

Ethereum update: Price is still hanging in there, BUT the question we are waiting for the market to answer is what happens if BTC retraces? If there is a retest of the 6K level or lower, will ETH push to new lows? Or will it construct a double bottom? If the double bottom appears, we will be more interested in trade possibilities in terms of inventory, but that does not mean we recklessly jump in. At S.C., we let the market reveal its hand first, then we decide if the action is worth the risk or not. Listen to the market.