ETHUSD Update: The 320 break signals the return of bearish momentum and confirms the lower high formation as I described in my previous report. ETHBTC also offered a heads up with it's resistance failure that I mentioned as well. The question now is can this market find support at the projected levels and form a broader higher low?
Compared to my average number of views, my previous report was way below but for those of you who took the time to read it, it described what is happening now. 309 was the first support level to watch for stability, and price fell through like it wasn't even there. And this is exactly why I do not place buy orders at levels, because they are random until the market proves that there is a reason to buy there. The validation section of my trading plan is what helps me filter out this type of situation.
The next area is the 296 support which which is more in play at the moment. As I have written about previously this is the .382 of the entire bullish swing and since it is a proportion of such a large price move, price action around this level will be very noisy just like it was the first time it tested this area (and went below 270). And that adds some weight to the 292 to 281 support zone which is related to the .618 of the recent minor bullish swing.
Just below that is the 260 support that I explained previously also. The recent 4 hour candle is large and even though there is some retrace (wick) I will take that as a clue that this market is more likely to test the lower supports. Large candles are a sign of strong momentum so it is reasonable to expect the next few sessions to be bearish at least (unless there is a dramatic recovery during the next candle). Other factors that support this bearish argument are the lower high confirmation at 340, AND the failed high on the ETHBTC chart.
As I also mentioned in my previous report, in order for me to buy, I need to see a failed low, or higher low and it would be helpful if the market offered that structure at one of the projected support levels. IF the market can stabilize in the 292 to 281 zone, then that would signal more of a range bound situation. If I can get long somewhere in the lower part of the range, I will be targeting the 325 area at least initially. In particular I will be watching the price action for a higher low or double bottom on a smaller time frame and will be considering the mid 250s for stop placement. Price structures of this kind will negate the bearish momentum that is present at the moment. Otherwise I stay out.
I do not know if any relevant news came out, and the reason why I don't check or write about news is because price tells me everything I need to know. Price action made me very cautious about the previous up move and I reiterated it over and over. If the market wants to sell, it will sell. And again this price action was setting up before any news. News only serves as a catalyst and helps the market move in the direction of it's intention faster. One of the basic foundations of technical analysis is that the market discounts everything and that includes news.
In summary, the bearish momentum that was building up in the price action played out to a point. The confirmed lower high opens the possibility of testing the lower support levels that I wrote about previously. Keep in mind, the overall trend is still bullish, this market is just going through a normal correction and upon stabilization will offer another buying opportunity at attractive reward to risk ratios. Remember that the support levels are proportionate to the swings that they measure, and they provide reference points to evaluate for particular price action (like a double bottom). They are not buy prices to just set orders for. The best thing you can learn from my analysis is how to anticipate instead of react, because without that ability, you will always be chasing.
Thanks Mark. Your analysis is always very accurate, I do understand how patient you are with the confirmation of your analysis, you have basically confirmed two big trades 1 approximately two to three days ago when the market dove and another now. Why not capitalize on those retracements. Last night I was hesitant but wanted to sell what I had in lieu of the fact that the market was flatlining and I agreed with your analysis and had a feeling that we were going to be bearish today had I sold last night I could rebuy today knowing that we will go back up to Prior support levels and make 20 to $30 per coin. I get going for the big trade but it seems to me with your knowledge you've missed two potential big trade opportunities. You obviously know what you're doing, I'm just curious as to why you don't try to profit on what you make consider short-term trends even though they're big movements
KimJonUn
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I think if it lose the 270 support level could confirm the pattern head and shoulder.
uncomfortablepants
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@FabioDaSilva, metropolis is coming soon, which should help make this a cup and handle pattern where it jumps up after the handle is formed.
scottmazzy
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Good advice Marc. Thanks for taking the time to educate us.
TEXANUSAPROUD
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Excellent...thank you very much
barackobama
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Amazing analysis and i appreciate all the work and time you put into it.
Stangalang
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This is what I read somewhere "Caixin report says China Govt "thinking about" shutting down trade between bitcoin and fiat to stop money laundering". That there could be your catalyst for BTC dumping and ETH following. Oh and BTW, how foolish does that guy that was telling you how you were wrong and it wouldnt go down below 320 look now :D
zhongzhyu
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@Stangalang, Come on, that was a genius who bought ETH at $7. Don't know if he sold at $3 or not though.
SellzCarz
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Thank you. Explanations with your charts are first class and well beyond what most (all?) others offer on this site.