ETHUSD: Bearish Structure Says Avoid For Now.

ETHUSD update: Bearish momentum continues to maintain its grip on price as the 200 level is right around the corner. Structure has been very bearish in this market since July and why we have been sitting on the sidelines. Until this changes, best practices prevent us from doing anything else.

The herd mentality is a fascinating thing. And it can be observed clearly in the comments that people leave on these posts. The inexperienced do not know how to define a bear market and only consume what is put in front of them. This is actually a good thing because someone needs to be on the other side of the trade. If everyone agreed, there would be no market.

At S.C., we evaluate markets on structure and probability, not opinions and feelings. If the structure says neutral or range bound, we do not look to argue with it. Bitcoin is in a high probability location, and it's price action is neutral based on our criteria. It may not be in a position to buy at the moment, but as long as 5K holds, we will continue to look for bullish signs.

Ethereum on the other hand is a different story. The structure is clearly bearish and it took out its major support over a month ago. Again we don't argue with it, we simply stand aside until it can prove itself.

Most of the alts are in the same position except for 2 that are exhibiting not so obvious signs of strength (shared with members). We continue to carry some Ethereum in our long term portfolio but we discontinued cost averaging into it. Also we were careful not to buy too much which makes the position much easier to hold. Our plan is to rotate out of the under performers and move that capital into Bitcoin when the environment proves to be more favorable.

In summary, sentiment provides valuable information when it comes to timing markets. The crowd is always wrong at tops and bottoms and this is certainly not a top. Disagreement is necessary in order for a market to function to begin with. Otherwise there would be no liquidity.

We do not pretend to know where the market is going. At S.C., we base our decisions on structure. The market tells us which way probability favors and we listen. When it comes to Ethereum, probability favors weakness, we don't argue, we avoid. Meanwhile Bitcoin is telling a different story and it is good to see the herd exhibiting such extreme negative sentiment. The most entertaining part is when these same people finally become bullish. At 12K.