ETHUSD update: Judging by the bigger picture, this market has not sold off as dramatically as the others. In fact, price has rejected the 872 to 739 support zone twice, leaving behind long wicks in both instances. Although this market can retest lower prices, it is in a relatively better position to rally. In this report I will highlight the possibilities both bullish and bearish.
First of all, these markets are extremely emotional. The majority of participants in my opinion are not institutional or professional which means when the sentiment is bullish, it is very bullish, and when bearish, it is very bearish. It also means that these markets are highly susceptible to news and drama. Right now the big problem on the horizon is the Senate hearings this week. The heads of the SEC and CFTC are most likely not going to say anything positive about these markets, but no matter what, they are not going to stop the changes that are taking place from an economic and technological perspective. Governments are in place to control, especially the money supply. The U.S. government is infamous for devaluing the dollar for a whole host of reasons that are often at the expense of the little guy. One of the main reasons BTC was created was to give back some control to the little guy.
With that being said, events such as the hearing, and other regulatory actions only serve to scare the market temporarily, not drive it to become obsolete. If anything, regulation will bring stability to this market over the long run. Stability is good for long term investors and institutions, but minimizes opportunities for short term speculators, especially inexperienced ones. I do not write about market philosophy often, because it is more of a matter of opinion, but in this case I think it helps to shed light on why I choose to be generally bullish in the face of bearish momentum. This is big picture positioning, not day trading.
In the case of this market, price is now testing the 872 to 739 support zone which is the .618 area of the recent bullish structure. Price has rejected this zone twice which adds to its significance as a large magnitude support. Currently there is also an inside bar (previous candle) which can serve as a long trigger if the high 999 is taken out. Generally in an area like this I am looking for bullish reversal patterns. They can come in many forms with the higher low and failed low being the more obvious. IF a reversal patterns appears, it is a good place to consider swing trade or position trade longs.
The bullish perspective is in anticipation of a reversal, and not reacting when price is on the move higher. What about the bearish momentum that is still in play? IF I was day trading these markets, and was able to short, I would be looking to capitalize on lower prices, but since I am not, I can only offer an idea of how extreme price can get before momentum becomes exhausted. Current bearish momentum can take prices as low as 670 which is the lower boundary of the reversal zone measured from the 770 low. IF this market is going to fail at the lows, that is the highest probability area where this fake can occur.
In summary, your trade strategy begins with a perspective which is a function of the time horizon you choose. There is no one size fits all way to trade, it all depends on what what kind of risks you are willing to take, and how much capital you are working with. Reacting to short term movements without any consideration of where price action is occurring in terms of the bigger picture sets you up to be on the wrong side when the bigger picture reasserts itself. The current area in this market is a high probability reversal area, and one where I look for a larger magnitude reversal rather than a high risk short. I look to buy supports and sell resistances, not the other way around, and we are in a support area. It is just a matter of waiting for the right pattern to appear.
Thanks Marc. I would not be too surprised if BTC and all the crypto will going to push down further. Maybe even another 50 or 60 %. Actually I would appreciate it if it does! why? Simply because I see this as an excellent opportunity to rearrange my portfolio. It was 98% on BTC before selling at ath resistance zone.
Since then I buy very small amounts (0,5-1%) portfolio size at each support zone on several coins and HODL.
Of course short term this strategy did cost me some of my profits, but since I a) only trade profits, b) look at a time horizon of at least 1 Year, more likely 2 Years or longer I'm confident that the next bubble will arise at some point, everyone will again be overly bullish, Media kicks in and will talk about the enormous recovery of crypto and all the same story will start fresh. And until then I take thinks as they come.
And if the crowd decides to go into another crypto supersale following the strategy buy high - sell low I will be here and support them until my portfolio setup is done. After that things become easy again. Just wait and HODL.
UnknownUnicorn995432
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Thank you. Very good analysis. I agree with the support lines that you have mentioned, but I think we need to look at the forest and not the trees now.
When BTC falls, everything falls with it, with a few exceptions of course. This time ETH is not going to be the exception.
BTC is probably going to test the 5k-6k support zones over the next 48-96 hours, i.e. 2-4 days.
Nothing good will come out of the hearing on the 6th. The most criticized will be USDT and Bitfinex. CFTC is not happy with BTC futures handling either as several financial institutions have made complaints against it. Regulation is the first step in overall abandonment in the cryptoworld. Looking at BTC's past history, this year is no different from 2014 anymore. Only it may get worse this time.
BTC is like the phoenix as someone pointed out to me. It needs to die first to re-emerge 10 times stronger. This is what is happening again. And well, we are all used to it.
For those who can hold, should hold. Those who are afraid now, they should not panic too much. They might have to wait a long time, but BTC will remerge.
On the other hand, ETH will dominate the crypto world this year. Flippening is upon us ;)
SrTocino
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@doctorkesh, yes. The flippening is imminent. BTC has no advantage over good alts such as ETH. We may see 20k again this year though.
UnknownUnicorn995432
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@SrTocino, possible, but not likely. But this is just my personal view. For that, we need ETF approval. Not happening this year.
XRP is much faster than any crypto. You can trial it yourself if you want. 10-30 secs is just a dream come true in transferring funds. It is the best crypto to use for arbs ;)
NEO, ETH, IOTA and XRP are the ones to acquire whenever they fall with BTC.
If BTC goes to 20k, then these currencies will probably rise further along with BTC if they can maintain the same BTC pair ratio.
PCHamamas
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@doctorkesh, XRP is over controlled by the few, theres plenty of up and coming cryptos to give Ripple a run for its money
UnknownUnicorn995432
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@PaulC69, I think you are right. However, there is no other coin that moves as fast as it does at the moment.
The harmonics suggest $670, but I think now is the bottom. We'll just have a triple bottom (BTC @ 8k). If BTC goes under 8k, there's nothing stopping it from 5k, 3k, 1k. Investors will lose confidence & it'll take months before any recovery.
I think the market makers are strong enough to prevent that from happening.
Also, we're getting lots of bad news; that's exactly when new market cycle begins.
RamzaBehoulve
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@DrJLT, BTC market makers failed. It droped below 8k again... and the reaction to the event is very weak so far.
Since then I buy very small amounts (0,5-1%) portfolio size at each support zone on several coins and HODL.
Of course short term this strategy did cost me some of my profits, but since I a) only trade profits, b) look at a time horizon of at least 1 Year, more likely 2 Years or longer I'm confident that the next bubble will arise at some point, everyone will again be overly bullish, Media kicks in and will talk about the enormous recovery of crypto and all the same story will start fresh. And until then I take thinks as they come.
And if the crowd decides to go into another crypto supersale following the strategy buy high - sell low I will be here and support them until my portfolio setup is done. After that things become easy again. Just wait and HODL.