First let me say that in the long term, I am on this market which means as a buy and hold, it is a good idea. If that is your goal then the most value that you will get from my analysis is when to add to your position. And for those with very limited knowledge of trading, my analysis is short term and best used for day trading or swing trading strategies which focus on near term fluctuations.
My evaluation is an interpretation of the clues that price action offers and the goal is to estimate the PROBABILITIES of what price action is more likely to do next in the short term. It is not about being "right", it is about "listening" to the market and ADJUSTING when it provides new information. I feel the need to write this because it appears there are some in this community who still have a very limited understanding of the inner workings of financial markets and the value of . I welcome criticism, but if you cannot provide a detailed analysis and explain the reasoning behind your perspective to the community, then you are not providing any value to those who are trying to educate themselves further so please be considerate.
On that note, let's talk about the current price situation. There is a minor higher low at the 320 level and now a failed high at 340 on this time frame. This is because higher lows often lead to higher highs, NOT failed highs. This coupled with the fact that the recent swing has peaked just under the 346 to 367 resistance (.618 of recent swing) also adds to the argument that this market is more likely forming a lower high compared to the 392 level.
If price breaks below 320, this market is more likely to see the 309 support, and possibly the 292 to 281 area as well because lower highs often lead to lower prices. It is even possible to still see a retest of the 260 area. Upon a retest of any of these supports IF price stabilizes, it will likely be building a broad higher low which would offer an attractive swing trade opportunity to get long. If I see that scenario unfolding I will evaluate the risk at that time.
What also adds to the retest argument is the fact that ETHBTC is not supportive at all. Just like it signaled the price failure of this market days BEFORE the China news. Keep in mind I am not going to make decisions based on this alone, but I would like to see more supportive price action from this pair if I was looking to take a new position.
Keep in mind, if price some how finds the strength to push above 340, that would be a breakout. The reason why I will not take that trade is because the 346 resistance is just above and not worth the risk. It would need a strong catalyst to catapult it through that so I prefer to wait for a more attractive and I am willing to miss it if the retrace that I am waiting for never unfolds. Managing risk is more important so I prefer to wait until the environment is more favorable.
In summary, this market still maintains its long term structure. It is just that price is lacking the momentum that many are hoping for. Upon a retest of the supports mentioned earlier, if they can show stability (like a reversal pattern or candle formation), that would establish a larger degree higher low which would then open the door to a retest of the 346 to 367 . And a break of that will likely take this market to a new high. It just doesn't have the structure in place at the moment, so I define the scenario I would like to see and then I wait for more clues.
Comments and questions welcome.