ETHUSD update: Bearish momentum revisits the 270s and points to the possibility of a new low. When viewed through the lens of BTC, the not so obvious argument for a failed low shines through. This conflict offers clues about the hidden strength of this market and in our opinion not a good idea to short.
I published an article earlier on S.C. that goes into more detail on the structural conflict between the two markets. This reason alone is enough for us to avoid Ethereum and Litecoin until they can prove the return of more stable price action.
While many are focused on oscillators and trend following, they lose sight of the fact that BTC rules these markets. And even though it looks unattractive at the moment, it is still not making new lows. All while short interest is pushing highs.
If BTC holds and establishes a higher low, ETH is likely to follow. That means shorting into this low is a likely bear trap. This is why it is important to always look beyond the obvious when it comes to chart analysis.
At S.C., we are carrying inventory and a swing trade long in BTC. If there is a recovery, it will begin there first, especially since it has the most attractive structure and lower risk compared to the alts.
In summary, the crowd chases profits which is usually the path to more losses. High probability opportunities are infrequent and require a great deal of patience to recognize.
If the crowd is impulsive and impatient, then being the opposite is more likely to prove fruitful. Patience is the first step toward anticipating or letting the market come to you.
Everyone is quick to react to the obvious which in this market is to go short. Meanwhile their restlessness prevents them from seeing a subtle but important sign which is that Bitcoin is not pushing lows. And where ever Bitcoin goes, Ethereum is likely to follow along.
Ethereum may not be in the best position for a long, but it is also in an unattractive location for a short. Whenever this kind of conflict ensues, the best choice is the stay on the sidelines and let the market work it out. True opportunity is lost when your account is wiped out from forced trades, not waiting for the most favorable setups.
the last sentence is the most important advice a trader can get in the long term. Play only the best trades and leave the rest to the people that get their excitement by being right instead of making a reliable income.
srg3517
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I think the people are still waiting the etf manupulation, that we will see sure in shortly! Because the expectation of btc etf is huge and i think the SEC will not approve the btc etf and after btc will dump! This is my read!
Iruwen
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@srg3517, the next ETF that is likely to be denied is hardly talked about and short interest is approaching its ATH (I guess short to long ration already is there), it's looking all like April again when we saw that monster squeeze. Any sell-off will be met with tons of new longs and closing shorts right above a monster support, I don't expect BTC to see new lows. People got too used to making easy profit with shorting BTC.
On the other hand, I'm usually wrong or I would be rich already lol.
srg3517
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@Iruwen, i hope we won't see any lower lows just because of etf rejection! But the whales would want to manipulate on that!
NateSutton21
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@srg3517, yeah i expect them to reject it so their friends could fill their bags, have the hearing again and then approve. if it is rejected i can see btc suspiciously going up and vice versa if it is approved we'll probably suspiciously and confusingly see btc go down. i can see those possibilities happening.
fiona69
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You've always got great analysis. Good job.
BobbyTips
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" Whenever this kind of conflict ensues, the best choice is the stay on the sidelines and let the market work it out"
i told this myself just two days back,love to see a professional think the same way !!
vickydaswani
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pls review my work sir, tell me if somethings wrong
TomPower
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@vickydaswani, looks good vick, what marc is saying that the alts are making new lows but BTC isn't. What worries me is your above chart and if and when BTC makes new lows my portfolio will be in the Gutter! For all sake I hope u r wrong!
yolan
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@TomPower, just sell now and buy back at a lower price?