ETHUSD Update: 312 level compromised, but price sold off right back to 300. As I wrote about in my previous report, double tops are not always precise and based on this price action, this can be identified as a double top variation.
A double top is a bearish sign, especially on this magnitude. On top of that, the current wave count is not bullish at all, which limits the upside potential of these markets, and I will explain why in a moment.
People have asked me why I switch back and forth from using Elliott Wave. I don't switch back and forth, I am always evaluating the wave counts, but when they appear conflicting or confusing, I am not going to write about them in order to maintain clarity in my reports. I choose to present information that makes sense and provides clear insight.
The short term price action since the 198 bottom has been conflicting, but obviously bullish. Great for day trading because you limit your risk to small moves, but that kind of evaluation and risk management is up to you. My reports focus on swing trades and taking them when the factors line up to offer the most attractive reward/risk based on the criteria of MY trading plan. It can go without a trade for days, as many of you have noticed, but it is more important for me to control risk, rather than jump into any move just because the market is moving.
When this market peaked at 315, I was evaluating the next support levels which are: 292 (.382 of bullish swing) and 276 to 266 (.618 of bullish swing). Then I zoomed out to get more perspective, this is when I realized this market is not as bullish as it appears.
The 320 to 352 resistance zone (.618 of bearish swing) is a major area that needs to be cleared to prove this market is not completing a Wave C of a broader B and BTC has the same situation. B Waves are very tricky, and I know some traders have shared charts with the Wave A defined properly, my count was slightly off. In light of this wave count, the sluggish price action makes more sense now. Even if you don't count the waves, the broad resistance zone limits any long swing trade potential at these levels. Especially after the kind of price failure off of the 312 level.
If you want to day trade the bullish fluctuations on smaller time frames, that is up to you. As far as potential for swing trades, risk to clearly way too high. I do not want to get long at the highs of a corrective Wave B when the next wave is likely to be the C Wave to complete the corrective structure. This can take prices back to the low 200s at least. On top of that, we have the broader double top in play which looks to be establishing a lower high. All bearish signs.
In summary, the recent bullish price action has been slow at times, but looked like the buyers were returning , until you zoom out and see where this market is on the road map. The confirmation that the bearish C Wave is in play would be a break of the 276 to 266 support zone. If this bearish wave asserts itself, there will be plenty of day trading opportunities to get short, but again you have to have your own plan for that. Based on the current price structure, this is the scenario that is more likely to unfold. How will this help me? I know not to expect support levels to hold, and I know that bullish reversals will offer limited potential. In order for the market to prove otherwise, it needs to clear the 320 to 352 resistance zone.
Comments and questions welcome.
Also special thanks to the Tradingview community again for your support, I am now over 3K followers.
Thank you for your analysis. I got a question for you gurus!
" In order for the market to prove otherwise, it needs to clear the 320 to 352 resistance zone". Once price passes 352, it is approaching the top resistance for a potential Triple Top. Will that be too late to be bullish?
"If this bearish wave asserts itself, there will be plenty of day trading opportunities to get short", this market moves quickly, price can drop by 50% easily and fast. I'm not sure if there will plenty of opportunity to short. It sounds buy high sell low if we wait for price reach top to be bullish, drops a lot to be bearish.
That is my biggest puzzle in trading. Similar to EURUSD, the experts on TradingView kept suggesting short the pair in the past few months, now it is expensive, people are calling buy pull back, suggest buy!
I would appreciate your thought on this topic. Thanks again.
MarcPMarkets
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@mnwind, when I write that price needs to clear the 320 to 253 resistance to prove itself, the kind of price structure required to make that happen implies further strength. If there is a broader higher low in place below the triple top you are talking about, that triple top is more likely to break and price reach higher highs. It is all about the price structure that is in place. The market moves quickly, but that as fast as you are saying. If the market sells off, it will have small bounces and lower highs that can be good short opportunities on the day trading time frame. The EURUSD is a huge short in my opinion. You may be confused because you are mixing your time frames and strategies. I write about swing trading and longer time horizons. There may be plenty of day trade longs within the price activity of a bearish swing trade movement. You have to separate the perspectives.
Daniel_APM
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@MarcPMarkets, thank you MarcPmarkets! I do realize that I mix time frames and strategies. I often aim 300-400 pips when entering the trade, but take profit too quickly, exit after 100 pips gains, only watch price moves another 300 pips in my favor. I need make a plan, and execute the plan,not change plan and then get confused.
Daniel_APM
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@MarcPMarkets , BTW, how do you think of the structure for SP500? Bullish or bearish? I looks like an Ending Diagonal on the daily chart. On the weekly chart, the Fib retracements (0.382, 0.50) align nicely with major levels.
Daniel_APM
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@mnwind, This is another example I mix short term trade vs. longer term investment. I took profit at ~2400 for a large position (~300k) when price struggled to break that level, and tried to buy back with limit order at 2300, price shoot up and hasn't come back. Since then, I have no trade with Stock Index, patiently waiting for pull backs. It feels and looks very expensive to me now. Have to wait to buy low:) Thanks again!
jasonnamek
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Great analysis. I really like your patience, something I am struggling with and reading your TA really helps. I know it takes time out of your day to write up all these and share them, I hope you continue to do so and we are very thankful.
Yes, I completely agree. I also appreciate your patient manner and insight into your strategy, Marc. Thank you
MarcPMarkets
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@marie21962, you're welcome. Glad you find my analysis helpful.
MarcPMarkets
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@jasonnamek, you're welcome. I am glad you can appreciate the amount of time these take me to write. I do put a lot of thought into these before I publish them. I am happy that the community here is learning which has more value than just blindly buying or selling because someone puts an arrow on a chart.
EtherSwinger
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@MarcPMarkets, Really appreciate your time and thoughts Marc.
I really appreciate your analysis about price actions and resist/support levels.
I do use them to make my trades... daily or swinging... after following you, I have been making more successful ones
Thank you for your analysis. I got a question for you gurus!
" In order for the market to prove otherwise, it needs to clear the 320 to 352 resistance zone". Once price passes 352, it is approaching the top resistance for a potential Triple Top. Will that be too late to be bullish?
"If this bearish wave asserts itself, there will be plenty of day trading opportunities to get short", this market moves quickly, price can drop by 50% easily and fast. I'm not sure if there will plenty of opportunity to short. It sounds buy high sell low if we wait for price reach top to be bullish, drops a lot to be bearish.
That is my biggest puzzle in trading. Similar to EURUSD, the experts on TradingView kept suggesting short the pair in the past few months, now it is expensive, people are calling buy pull back, suggest buy!
I would appreciate your thought on this topic. Thanks again.