ETHUSD update: Bearish momentum continues as price revisits the 260 support level. I have been stopped out of my long, and will now wait until the market can show new signs of stability. At the moment, the next area of support is the 230 zone which is very possible until the momentum changes.
I have been writing about the 296, 260 and 230 levels for some time now. Now that 260 has been tested, that is a clear sign the bears are in control which can take prices back to the 230 area as well. The BTCUSD chart is also very similar and still has room to see lower prices.
Even though I have been stopped out, I am still bullish and now waiting until stability returns to these markets. If this is a Wave 2 of a larger 3, it can retrace quite a bit before seeing a significant reversal. Keep in mind I do not know how low these markets will go, and I am flexible enough to get back in if I see the right conditions.
The kind of price action I am waiting for requires 2 conditions. First a resistance needs to be taken out. These usually come in the form of a lower highs that get broken and as of right now, the 282 and 296 levels (old support, new resistance) will have to be broken. Second, after price breaks the resistance, it will be a matter of waiting for a higher low or failed low and that is the point when I can evaluate risk for a new position. When the market shows signs of continuous bullish momentum, there will be plenty of opportunity to add to the position.
So my plan is as follows: I will be watching the 260 area on the 4 hour time frame for a break of a lower high resistance followed by a reversal structure like a higher low or double bottom. If these appear, I will consider putting on another small position (25% of my normal beginning size) so that if I am stopped out again, the loss is proportionally small. If price falls through 260, then I will be watching the 230 area for the same kind of price action. Just to be clear, this process can take days if not longer.
Also at the moment, 310 which is the .382 of the overall bearish swing is a key level for defining momentum and as long as price stays below this level, I will expect any bullish swings to be limited in proportion until price action proves otherwise.
I have been getting all kinds of PMs asking me about news, and the China situation. Again the news just pushes prices faster. Corrections are normal and required in order to shake out the weak hands and provide new opportunities. In terms of the big picture, any major sell off is a buying opportunity for long term positions in my opinion.
In summary, as bearish momentum maintains its hold on all of these markets, the lower support levels like the 230 area now become the focus. The key to speculating in any market successfully is being prepared and defining a scenario ahead of time which is not a prediction. If the market presents the planned scenario then great, you follow the plan and if it doesn't, you stay out. Many people still do not understand that there is a high degree of randomness to price action which is the reason why no one will be right 100% of the time and also why we are always evaluating probabilities.
As usual great impartial accurate analysis, I"m sure you're hiding a crystal ball somewhere.
Further to your analysis I see a potential double bottom forming at 255.
MarcPMarkets
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@ChrisLeahy, not sure what time frame you are referring to about the double bottom, but these markets (especially BTC) need to settle.
ChrisLeahy
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@MarcPMarkets, Thanks for taking the time to reply. Ive attached a link to the 4 hour chart below showing where i Thought the double bottom started its formation and where it failed on Thursday.
mcmutton23
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Thanks for the continued analysis. Bitcoin keeps getting bad news which i think is the bewrish catalyst. Recently the usa is putting heavy sanctions on North Korea basically not allowing him to use any of his bank accounts and it was reported that Bitcoin is the only means of funding that he will have. I think that news drove the price down quite a bit as of yesterday.
MarcPMarkets
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@mcmutton23, hehe either way, the price is going to go the way it wants to go.
MPauferro
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You said everything mate. Perfect analysis and sharp punctuation of details that many noob traders do get it. Thank you for sharing your thoughts.
MarcPMarkets
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@MPauferro, you're welcome. Glad you find my analysis helpful.
jdcelery
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thanks again!
MarcPMarkets
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@jdcelery, you're welcome. Glad you find my analysis helpful.
Further to your analysis I see a potential double bottom forming at 255.