ETHUSD update: The 1291 minor support level has generally held while price is attempting to retest the level again. The resulting higher low formation is a reversal structure that implies strength. On top of that price has been consolidating into a triangle which often results in trend continuation.
I wrote about the swing trade potential around the 1291 level in my previous report while this market was pushing into the 1250s. I also wrote that IF price can show some form of reversal pattern in the area, it would offer a swing trade opportunity because risk will be better defined compared to the current 1459 target.
As of now, I am long from 1311.65 with a stop at 1243 and target at 1395. The reward/risk is actually 1.2/1. It is not spectacular, but what I am looking at more is the price structure and probability of the bigger picture trend reasserting itself. Price may be fluctuating over the next day or so, but the bias is clearly bullish based on price structure. Price has also tested a projected support (1291) twice resulting in a higher low which is a clear momentum reversal pattern. The current candle took out the previous candle high and is attempting to close strong. For MY swing trade plan, there is enough criteria to take a risk because I am now in line with the momentum and bigger picture trend.
Have I gone mad? Has the market finally sucked me into an emotional trade? Not quite. I am simply following my plan. I am in line with the trend, a support as been tested and established and price is now testing it again showing signs of a higher low within a triangle while I can clearly quantify risk and a reasonable target. On top of that, this triangle can be interpreted as a sub wave 4 of the 5th wave that I have been writing about as well. This structure implies there is a better chance for at least one more test of the high.
This trade is slightly aggressive because it is off of a minor support, and I did not wait for the current candle to close strong, but I am willing to take those chances in light of a bigger picture that is generally bullish. There is no perfection or precision, it is a matter of risk tolerance and context. If this market falls apart, which is always a possibility, I have a stop in place. It is wide, BUT I compensate for that with my size.
In summary, one of the basic tenets of TA is "history repeats itself" and that is what pattern recognition is all about. I have seen this situation countless times, and when enough factors line up within the criteria of MY plan, then I am comfortable taking risk. The current price action FOR ME is clearly presenting one of those opportunities. Charts offer tools to help organize price information, but if your experience is limited when it comes to interpreting that information, then you will have trouble seeing the "context" which is not as obvious. This is one of the reasons why everyone was calling for BTC to go to 5K and I went long at 13150. Interpreting context requires a deep understanding of how markets work and is a function of experience which goes beyond what you can see on a chart. Things change fast in these markets, and that is why holding onto an opinion is not a good idea, especially on smaller time frames. I look for factors to line up that help me determine direction, risk and reward. Once I have that information, and it is acceptable to MY tolerance, I take a trade and that is what you see here.
@Dirich patience and calm is required :) The price will likely recover and climb above 1280 in the next couple of days. At least my guess is that it already has hit the lowest point and is heading upwards.
Dirich
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@Q3D, I hope so, I wish to make profit. Anyway, thanks alot
Q3D
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@Dirich, No problem, sometimes you need help to remember to focus on the bigger picture.
Remdog420
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@Q3D, hitting new lows, but I do believe ETH will hold the line as Eth actually has tremendous utility, and soaring demand giving the ICO's and protocols being developed leveraging ETH, aka a PAAS type platform which easily would be worth its current market rate giving the scale and growth of transactions. On the other hand, many other coins lack real utility. Monero & ETH will be where there is a flight to safety! At least that's my fundamental take on this crash.
normstock
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Oh no Master Principato, do not cross to the dark side, please stay in the light ..
lol i'm just kidding, thank you very much for your analysis
josephtse
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Not sure why you didn't short above 1400. Signs of a top in cryptos were obvious, both from a Technical and sentiment perspective. Rsi and macd negative divergence very obvious. Then trendline broke, price hitting upper Bollinger band so reward/risk favored the downside at the resistance point above 1400. First TP is 1125..second is around 1050.