ETHUSD: Retrace Offers Insight Into Short Squeeze.

BITFINEX:ETHUSD   Ethereum / U.S. Dollar
ETHUSD update: Across the board these coins have attempted to retrace as they follow BTC's lead. Unlike BTC , this market has managed to break a bearish trend line . This is the first step toward change, but just like BTC , must meet certain criteria before it is reasonable to expect a more significant bullish move.

Clearly, everything is following BTC and all have similar price action. Now that the first bearish trend line is broken, the next thing that needs to happen is the break of the 451 level (.382 of recent bearish swing). As long as this level is not compromised, bearish momentum is still in play. This is why I emphasized in my previous BTC report that it is risky to buy the initial lower high, unless you don't mind taking some pain.

The pain comes in the form of the next retrace or test to see if the bears are at full capacity (market establishes a lower low). If a new low cannot be established, then that is a sign that a short squeeze is likely. Being that the short interest is at an all time high in BTC , (the crowd is never right at tops and bottoms), it is just a matter of catalyst that can turn this market around fast.

Even if the 451 level does not break first, this market can still present a double bottom or failed low situation which would offer great buying opportunities in my opinion. The 374 support (old resistance/new support) and the 344 reversal zone boundary are the levels to watch for these two bullish scenarios respectively. A decent short squeeze can take this market back up to the low 500's to test the broader bearish trend line which can serve as a good potential target to measure reward/risk from.

In summary, buying into lows of a bearish environment can be tricky because there is no way to know if the low is in or if this market is going to push a new low. No matter what the trend, a retrace always presents a test that can be used to gauge the strength or lack of strength of the participants that are affecting price the most. Keep in mind, not all new lows are created equal. A failed low is a condition where price goes slightly lower which makes it look like the trend is continuing, only to reverse quickly which is often a sign of hidden strength and means that there are not enough new bears joining the party. Also remember that a bottom is a process, not an isolated event, which means patience often pays in these situations. If this market is bottoming here, there will be plenty of opportunities to get in at attractive reward/risk ratios.

Questions and comments welcome (to see a very broad view of this market with a wave count, see my chart on S.C.)
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| | Cofounder (S.C.)

Hi MArc, what do you think about rhis comparison ( 2014 vs 2018 ) ?

This would be a decent analysis besides the fact that BTC short interest is NOT at an all time high. The squeeze happened, and resulted in a puny rally. In the meantime, long interest is skyrocketting and having almost no impact on market price. Here come the bears.
+1 Reply
"Also remember that a bottom is a process, not an isolated event, which means patience often pays in these situations." true but many of us fail to follow
+4 Reply
siwe7 retiringsoon1
@retiringsoon1, i am learning to be patient in these market. the best way to learn this is to just watch and don't trade :D it is hard, but it works. in the next cycles i am eager to trade, due to all things i've learned
+1 Reply
Thanks Marc, always appreciate your updates. This gives me some hop that we're close to seeing more upside soon.

Been doing some amateur TA myself (I'm learning), would appreciate any thoughts you may have on what I'm seeing. I'm nowhere near good enough to see the finer detail that you do in candlestick patterns yet... So am perfectly happy to get ripped a new one by the experts here.

Not sure where we're going here on the daily.

I just drew some bear flags on the drop down from the huge H&S. Purposefully, I started with the flags themselves and left the flag stick until last when drawing, and started with the flag stick from the first descent (so as to sense check the measure of the drops). Then I copied and pasted the same flag stick on each flag at each stop down, the drops are pretty much bang on against that same measure from the first drop, all the way down.

The bear in me has been wondering about that pocket of support that converges with the tight falling wedge that we were in for a number of days, AND what I think is the mean trendline (in dashed pink). That might be the final drop for ETH, before a return to mean? The lower end of the bigger support area we're currently in represents an 80% drop from ATH.

Then again, my bullish side sees that the MACD looks like it's crossing up for the first time in a while, so maybe this is the rally that takes us out of the downtrend. Can't decide right now, so I'm waiting with most of my trading fiat on the sidelines. Though I do have a small position open which I'm looking to move out of at €350 unless things run up beyond that blue trend line convincingly.

mattgarbutt mattgarbutt
@mattgarbutt, *hope, that is. Damn my proofreading. Also, I should really update that chart with a red box above where we are right now, since we crashed through that support a while back.
mattgarbutt mattgarbutt
@mattgarbutt, Also, just noticed that the second of those flag sticks is in the wrong place, so I'm probably off here.
Great post Marc. :)
But i think we might be going to the extension zone of 300. I have been following this chart and its working great for me so far .... Let me know what you think

Great, Thanks. Could you elaborate a little on the short squeeze and how it works?
therandomwalk YourFriendFrank
@CryptoBlake, short squeeze. If a lot of people are short then they are latent buying power. Squeezes happen when the bears lose control to the bulls who chase prices higher forcing the latent buying power to close out.
+1 Reply
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
SV Svenska
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
HE עברית
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing Send feedback Ideas Published Followers Following Private Messages Chat Sign Out