ETHUSD Update: Triangle is broken by weakness and minor supports taken out. The 183 to 163 support zone is the next area I will be looking for reversal patterns to buy back in.
The 214 area support which is the .382 of the recent upswing has been compromised which indicates that the bullish momentum generated from the 136 low is not driving this market at the moment and further consolidation is likely.
My long from 228 was stopped out for a small loss at 207. Small losses are the best losses. I was never able to justify adding at 224, and this is exactly the reason why I do not place blind limit orders in the market at a predetermined support. I wait for validation, which helps me to more often than not avoid support breaks like the 224 level. So what's next?
The BTC drama has created too much uncertainty around the hard fork that is now happening on 8/1. To make matters more uncertain, brokers like Coinbase are giving account holders a hard time with withdrawals and web articles are warning participants to find out what their third party key holders are going to do about the hard fork. With August 1st being only a week away, I expect fear and volume to get worse. Think about it, do you think a sane person will have the confidence to put on a large position right now. Would you?
On that note, this price action is not overly bearish. It is just weak enough to force out weak hands. The next area of actionable support is the 183 to 163 zone which is related to the .618 of the recent upswing off of the 136 low. I will look to buy upon smaller time frame reversals within that zone ONLY, even if they appear before 8/1, but I will compensate for the uncertainty by once again going in with only 10% of my usual size.
If price falls below 163, I will hold off on any buying and reevaluate because that would indicate a much weaker market. Also I will not buy any reversals unless they now appear within the support zone mentioned above. In my opinion, in this low volume environment, there are going to be too many false breakouts, and price action tends to be much more random. Best way to navigate it is to stay out. So if I am going to take a risk, it has to be at very attractive prices, and structure.
In summary, this minor support break is NOT extremely bearish, just a shake of the weak hands. Low volume and high uncertainty keep this market (and BTC) from making progress and I expect these conditions to continue until participants gain more certainty on 8/1 (and exchanges like Coinbase stop scaring people with withdrawal problems). If very attractive supports are reached like the zone mentioned earlier, I will be open to buying again, as long as the rules of my trading plan are met.
Thanks again Marc for your detailed insights! I love being able to walk through the whole position/stance instead of the just buy or sell call.
MarcPMarkets
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@audiocande, you're welcome. I'm happy my analysis helps. The trading process is very complex and I agree a buy or sell call is not enough information. Perspective allows you to make your own decision, not follow me blindly. That's why I emphasize the perspective, I want people to be able to trade on their own. You cannot expect to trade successfully unless you are trading on your own ideas and decision making process.
BobbyZilliox
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I thought it was going to be a soft fork?? BIP 91 right?
MarcPMarkets
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@BobbyZilliox, that was I was reading a week and a half ago. Apparently the appease the people who do not agree with the soft fork, the hard fork is happening. The fact that we do not have a clear picture of this is exactly what is holding the market back. In my previous report there is a link to an article that explain the hard fork.
HondaJr
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Thank you for the post! Does attractive price and structure mean that it is cheap like 130 or so?
structure means there is enough volume or something?
MarcPMarkets
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@HondaJr, Attractive price structure means price formations like higher low, double bottom or other chart formations, and it also means candlestick reversals on larger time frames. I want to see this happen within the 183 to 163 area.If price goes back to 136, I am steering clear until I see some stability.
I still have a support zone at around 204-205 myself and looking for confirmation for that to be broken before I go short, while I agree btc has caused uneasiness within the crypto community, I do see volume increasing over the last couple days on ETH, whether this signifies buying/selling it's still hard to gauge, but I think overall I'm still looking at eth to be bullish on longer time charts.
MarcPMarkets
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@koreanlaundry, Yes the longer time frame is still clearly bullish. The market just needs to get over this hard fork soap opera.
NoCode326
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@MarcPMarkets, The shorts are in deep with ETH. If you watched the tape over the last week especially Bitfin, you'd know what I mean. The day before yesterday BitFin had 17k ETH for sale between $227 and $235 with most of it at the $227-$227.50 level. I've never seen orders as large as this past 10 days - 26k at 190, Multiple buys of 5k plus in between $220 and $225, 215, and that was before the fall. There was a ton of buying interest but the shorts crushed it. And hard up ICOs. ETH is going to $80-$100 and soon. Real soon.