MarcPMarkets

ETHUSD: Lower High Can Lead Back To 872 Area?

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
ETHUSD update: Lower high established at the 1160 level which is not far from the 1216 to 1304 resistance zone . This formation is appearing across the main coins and signals further short term weakness.

This is the trading environment as I described weeks earlier. Vertical markets breed bad habits and now is when the bad habits become expensive. As I wrote in my previous BTC report, buying into the now minor peak had to be done responsibly and for me that means with fractional sizing and no margin. I also wrote that I prefer to wait for the retest of the supports which is now underway across the board.

In this market, a retest of relevant support levels is IF price can make its way back into the 872 to 739 area (.618 support zone relevant to recent bullish structure). That would produce a broad double bottom or possibly a failed low formation and would be a good location to consider a swing trade long according to my plan.

The extreme price that I would be open to buying into is the 670 level which is the lower boundary of the reversal zone measured from the 770 low. This zone is based on a proportion of the most recent bullish swing. IF price pulls back that far (anything can happen),I will be looking for reversal candles such as a pin bar or engulfing pattern to enter into a position trade long. I like this area the most because it represents an extreme price which is often where the herd is pushed out of longs or emotionally seduced into shorts. It is also where risk on the long side is the lowest relative to recent price structure.

Speaking of shorts, selling into a lower high is not a bad idea, because reward and risk can be clearly quantified. Overall 1160 is the level to define risk from while the nearest target is 872. The current price is not the best entry since reward/risk is around 1:1 or less, but a minor retrace higher can present an opportunity on the swing trade time frame. I do NOT short these markets because I do not use margin, and I intend to participate on the bigger picture which is bullish . For those of you who are comfortable with this side of the market, you must not hesitate to take profits if you have the opportunity because the general environment is bullish and shorts will most likely get squeezed fast. I mention the short side because being aware of both sides of a market is part of having perspective.

In summary, lower highs often lead to lower lows and within the context of a bullish bigger picture, a conflicting situation like this can be confusing. This is why a well defined plan and flexibility allow for effective trading around the confusion while the reactionary herd is still looking for the uncommon and unrealistic vertical market environment. My plan, just like in the other markets, is to participate on the long side which is in line with the bigger picture. As this bearish retrace may present a short term opportunity for some, I am waiting for the broader trend to reassert itself and I have levels to anticipate where that change will most likely take place. Either the market confirms my scenario, or I don't participate it is that simple.

Questions and comments welcome.
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Comments

i cant wait till i am as smart as you people. Right now, I.AM the HERD!!!! So sad. laugh. I don't like this breakout trading. I lose every time. If I stare at the market all day, and trade in and out all day, I win almost every time. But just little bits like, 20 percent of my total up 3 percent that day. So the question, where is a good place for me to get properly trained.
+4 Reply
afterforever JimJupiter1327
@JimJupiter1327, The interwebs. All information about technical is out there. The rest is experience. Stay away from expensive courses that promise you sure win strategy. There are none. Magic numbers are BS as well... unles s you regularly go to a fortune teller or call psychic hot line heh. Also, remember the markets wtfpwn overwhelming majority of traders. Only small percentage becomes successful.
+1 Reply
Thank you!
+1 Reply
I 100% agree with your analysis of the overall market , thanks for posting!
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I sold all my Eth yesterday when i spotted the double top, i dont regreat it.
+1 Reply
Thanks, totally agree with you.
+1 Reply
Great analysis. Thanks for your hard work. One thing I found to be true is that new opportunities always seem to present themselves. Thanks for your leveled perspective over these past few months. It often wasn't what I wanted to hear, but it gave me a good insights to build my strategy off of. You have been a great help and I've been learning a lot from your posts.
+1 Reply
Thank you Marc.
+1 Reply
Thanks for the analysis
+1 Reply
Thank you for helpful posting
+1 Reply
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