ETHUSD Update: 296 support broken, and no signs of reversal. If price cannot stabilize and continues into the next support areas, that will signal this market is more likely to consolidate rather than reach new highs any time soon.
The 296 support is the .382 of the entire recent bullish structure. I wrote in my previous report that this level was more likely to be revisited in light of the Shooting Star like pattern on the weekly time frame. The fact that the low was taken out means bearish momentum is in effect and will continue until the market can show a significant sign of reversal. An example would be a Hammer or any variation of a pin bar with a long wick on the bottom on the weekly time frame.
The next support zone is the 233 to 196 area which is the .618 of the recent bullish structure. If this zone is reached, it indicates that this market is fluctuating within a broad Wave 2 consolidation (see weekly chart). This scenario will require closer attention to shorter term targets until the market breaks out on the bigger picture.
The other support level worth noting is the 260 area which is an old resistance (inversion) and high of Wave 1 of the current bullish structure. Keep in mind, these levels are reference points to evaluate for reversal patterns and stability, not to place blind entry orders.
Also remember it is better to buy when the momentum reverses rather than buy cheap because without momentum on your side, price is likely to get cheaper. Bottom and top fishing are very expensive efforts as many of you will learn the hard way.
With that being said, in order for this market to prove that buyers are firmly in control, the newly formed 320 resistance area must be taken out. This is the .382 of the current bearish swing. As price goes lower, this level will adjust as well.
So there are a couple of ways you can play this. You can start buying small into the weakness and take the pain until price eventually stabilizes and begins to build bullish momentum. Or you can let the impulsive market crowd deal with the stress and uncertainty and let their order flow develop into a supportive price structure that signals higher prices. Waiting for the second scenario means you will not get the best prices, but you will also not have to deal with the pain. It's is up to you.
I am waiting for price stability. At the moment there is no sign of that and I don't mind not catching the bottom. I want price structure to be supportive, and I want to be able to clearly define my risk based on the structure and until the market let's me accomplish that, I just sit this out and wait.
In summary, the weekly Shooting Star trigger offered insight into the current selling momentum. The 260, 233 and 196 areas are the next levels to observe for any supportive price action along with a reversal. As a swing trader, I look to buy weakness and sell strength and there is plenty of weakness now. It is just a matter of waiting for stability to appear and then evaluate the risk at that point. And this does not mean I will get the lowest price, it means I will get in when the market favors bullish momentum.
@lalmanzar, hehe thank you. Glad my analysis is helping.
JeppeP
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Hi Marc, thanks for another good analysis. I totally agree with you that trying to catch the bottom can be painful. Please see the analysis by @DLavrov for the early signs of a bullish reversal. You might also be interested in the Elliott Wave analysis by @ew-forecast. They differ from yours but I think they might be right. If they are, we are seeing a .5 retracement of wave 3 starting July 31, i.e., we are in a powerful wave 4. If we retrace more than .5, or overlap the high of wave 1 (July 18), the analysis is no longer valid. Keep up the good work!
MarcPMarkets
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@JeppeP, thank you and thanks for sharing your info also. It is good to have other points of view. That is what makes a market. Hehe.
KiemCoin
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I appreciate the education that you give with each chart. Thanks!
MarcPMarkets
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@KiemCoin, you're welcome, glad you can appreciate the educational value of my analysis.
lokeshgurram
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I wonder how long it took to get that level of patience in making a trade. Hope we can learn that by following you. Thank you for detailed explanation as always:)
MarcPMarkets
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@lokeshgurram, about 10 years. I got hammered a lot.
radrider
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@MarcPMarkets : 320 got break, reversal sign and should we set target to 360-380
MarcPMarkets
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@radrider, 320 break is just the first step, not a trigger. I need to see a higher low now. I wrote about it in my most recent report.