ETHUSD: Double Bottom Points To Squeeze. Can BTC Lead The Way?

ETHUSD update: As BTC flirts with the low 6900 area, this market is being pulled along for the ride. Even in the face of significant BTC selling, this market is showing signs of resilience around the 400 psychological support level. Along with that, the likelihood of a double bottom formation is high.

Earlier I published an article on S.C. and mentioned some possible conspiracy theories for BTC. As ugly as it looks, the bigger picture still presents a configuration of strength. If it recovers off the current lows over the next day or two, ETH is in a position to squeeze significantly.

Double bottom formations are common reversal patterns. What makes this possible double bottom special for ETH is the location. Not only is 400 an important level, but the low 390s are also. The key is waiting for the right candle to appear. At the moment there is nothing.

If price manages to mount a rally off this area, it will establish a broad range bound price structure from 400 to 515. This context helps to further shape our decision making in terms of managing our active swing trade going forward.

Keep in mind price can actually go slightly lower than 400 and still be considered a double bottom. These type of fake outs often lure in a ton of shorts that actually force the price higher faster when they realize they are caught on the wrong side.

If price falls apart, which is always a possibility, then the next support in question will be the 358 area. Even if price probes the 390s or 380s, as long as it does not break 358, the broader structure is pointing to strength in the form of a higher low.

In summary, do not get sucked into "why" the market is selling off. All that matters is that it is. More importantly, the focus should be on how new price structures and levels shape the probabilities moving forward.

The current location and formation point to an increased probability of a bullish reversal. This is the premise behind our trade and it is just a matter of letting the market play itself out. Like I titled my S.C. article, opportunity lurks around the ugliest prices.